The U.S. trade deficit is expected to widen slightly in April as a rebound in exports of aircraft will be offset by higher oil imports. Economists are concerned that all the turmoil in Europe will cut into U.S. exports in coming months, weakening economic growth in the United States.
Economists surveyed by Thomson Reuters expect that the trade deficit widened slightly to $41 billion in April, up 1.5 percent from March. The Commerce Department will release the report at 8:30 a.m. EDT Thursday.
The deficit in March rose 2.5 percent to $40.4 billion, the highest level in 15 months, as rising oil prices pushed crude oil imports to the highest level since the fall of 2008. The big jump in oil imports had offset another strong gain in U.S. exports in March.
Before the trade report came out, Boeing Co. had announced that its orders for airplanes were rebounding. It announced that it had booked orders for 35 new 777 planes in April, a turnaround from last year when Boeing was cutting production.
With demand now rising, Boeing has said it plans to speed up production of the 777, as well as its large 747, next year.
However, economists are worried that America's rebound in exports could falter in coming months under the weight of Europe's debt problems.
The turmoil will mean weaker growth in Europe with many economists worried that Europe could fall into a double-dip recession. That will dampen demand for U.S. exports in a part of the world that accounts for about 15 percent of U.S. exports.
American sales are also threatened by the fact that the euro, the common currency of 16 European nations, has fallen in value against the dollar as investors, worried about possible defaults in countries such as Greece, have fled to the safety of dollar-denominated investments.
Earlier this week, the dollar reached a four-year year high against the euro. A stronger dollar and a weaker euro hurts America's trade balance with Europe by making U.S. products more expensive in European markets and European products cheaper for U.S. consumers.
Even before the debt problems hit Europe, economists were forecasting that America's trade deficit would widen this year as a rebounding U.S. economy boosts demand for foreign goods from the lows hit last year when the country was struggling to emerge from the worst recession in decades.
The trade deficit through March was running at an annual rate 23.4 percent higher than the deficit for all of 2009, which totaled $378.6 billion. That was the smallest trade deficit since 2001, another year when the United States was in a recession.
While the U.S. deficit with China declined slightly last year, it is still by far the largest for any individual country, a point that has attracted attention in Congress at a time when the United States is coping with unemployment near a 26-year high with more than 8 million jobs lost in the last recession.
Some lawmakers are pushing legislation that would impose stiff trade sanctions on China unless it allows its currency, the yuan, to start rising in value against the dollar. However, Treasury Secretary Timothy Geithner and Secretary of State Hillary Rodham Clinton made no headway on the currency issue during high-level talks in Beijing late last month.
Geithner is scheduled to testify on America's trade relationship with China before the Senate Finance Committee on Thursday.
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