Another Sign of Hard Times: Demand for Imports Drops

For the first two three months of this year, the trade deficit is running at an annual rate of $715.5 billion, up slightly from last year's imbalance of $708.5 billion, which had been the first decline after the deficit set records for five consecutive years.

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Economists believe that the deficit will decline this year and that exports will continue to benefit from a weaker dollar and imports will fall, reflecting the weak U.S. economy, which many analysts believe has already fallen into a recession.

For March, the deficit with Canada, America's biggest trading partner, edged up 0.4 percent to $6.5 billion, while the deficit with the European Union rose by 9.1 percent to $7.5 billion even though U.S. exports to the EU edged up 1.2 percent to a record $24.1 billion. This reflected the boost that American products have gotten as the U.S. dollar fell to a record low against the euro.

The deficit with Japan rose 8.9 percent to $7.5 billion while the imbalance with the Organization of Petroleum Exporting Countries totaled $14.1 billion, an increase of 6.8 percent from February.