U.S. Trade Deficit Falls To $46B

A narrower deficit could lead economists to upward revise their growth estimates for the first quarter.

The Commerce Department said Thursday that the trade deficit decreased 12.4% to $46 billion in February, down from $52.5 billion in January.

Exports edged up 0.1% to a record $181.2 billion. U.S. businesses sold more goods in Europe, China and other parts of the world.

Imports dropped 2.7% to $227.2 billion, after hitting a record high in January. Imports of foreign oil, cars and machinery all declined.

A narrower trade deficit will weigh less on growth because it means businesses sold more American-made goods overseas while U.S. consumers bought fewer foreign-made goods. Still, economists are concerned that Europe's debt troubles and slower growth in China could dampen U.S. exports and drag on growth this year.

Most economists expect growth slowed in the January-March quarter to an annual rate of less than 2.5%, down from 3% at the end of last year.

Europe represents about 20% of America's export market. The deficit with China has been growing. Last year, the deficit with China hit a record $295.5 billion, the highest deficit ever recorded with a single country.

China earlier this week reported that it returned to a trade surplus with the rest of the world in March after posting a rare global trade deficit in February. Chinese export industries have been hurt by economic problems in Europe and the economic slowdown last year in the United States.

With millions of Americans still unemployed, political pressure has grown in the United States to impose economic sanctions on China. Critics say China has undervalued its currency against the dollar. That has made Chinese goods cheaper in the U.S. and American products more expensive in China.