Monthly Budget Surplus Second-Highest Ever, But Trade Deficit Widens Over 10%

The U.S. Treasury reported yesterday that the federal budget surplus for April was $177.7 billion, the second highest monthly surplus on record. The trade deficit, however, reached its widest level in six months on higher oil prices and imports. For fiscal 2007 so far, the budget deficit dropped to $80.8 billion versus $184.1 billion in the same period last year. The trade gap grew more than 10% in March to $63.9 billion. In view of the wide gap, some analysts have shaved their estimates of Q1 U.S. economic growth to 0.7% or less from the 1.3% guidance provided by the government last month. Though the widening of the gap was severe in March, the Q1 trade gap came in at $180.7 billion, less than the $191.6 billion in Q1 2006. U.S. oil imports hit their highest point since last August and the average price for imported oil rose to $53.00 per barrel from $50.71. Overall U.S. imports went up 4.5% in March to $190.1 billion, led by a gain of over 11% in imports of industrial supplies and materials, including crude. U.S. exports did well, rising 1.8% in March to $126.2 billion. Exports to Canada, Germany and China set records, and exports to Japan were the highest in six years. The trade deficit with China shrank 6.4% to $17.2 billion.

Sources: MarketWatch, Reuters
Commentary: The Fed Rates the Economy • Budget Deficit: What's $2.9 Trillion Between Friends? • Economic Data Shows Room For Hope. Maybe.
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)

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