The U.S. trade deficit jumped to the highest level in 13 months in April as America's bill for foreign crude oil soared to an all-time high.
The Commerce Department reported Tuesday that the gap between what the nation imports and what it sells abroad rose by 7.8 percent to $60.9 billion, the largest imbalance since March 2007. The April deficit was $4.4 billion higher than the March imbalance of $56.5 billion.
The deterioration in the deficit was driven by a $4.3 billion increase in crude oil imports which jumped to a record $29.3 billion in April, as the average per barrel price rose to an all-time high of $96.81.
Oil imports are expected to climb further in coming months given that crude oil has continued its relentless rise and is now trading above $130 per barrel.
U.S. export sales totaled $155.5 billion in April, up 3.3 percent to an all-time high, reflecting big gains in sales of commercial aircraft, farm machinery, medical equipment and computers. But this increase was swamped by a 4.5 percent rise in imports, which also set a record at $216.4 billion, reflecting the huge increase in oil as well as big gains in imports of autos and consumer goods.
The deficit through the first four months of this year is running at an annual rate of $707.5 billion, up slightly from last year's deficit of $700.3 billion, which was a 7 percent drop from 2006. The improvement last year came after the trade imbalance set records for five consecutive years.
Many economists are looking for the deficit to shrink again this year as a sharp economic slowdown in the United States cuts into consumer demand for imports and the weak dollar helps to boost U.S. exports.
The Bush administration after tacitly accepting the decline in the dollar for years as a necessary ingredient to boost U.S. exports has switched signals and is now talking about the need for a stronger dollar, a reflection of the pain being inflicted on Americans with gasoline prices now above $4 per gallon. While a weak dollar makes U.S. exports more competitive on overseas markets, oil producers demand higher prices for crude oil, which is priced in dollars.