The U.S. trade deficit fell unexpectedly in February to the lowest level in more than nine years, as the deep recession pushed imports down for a seventh consecutive month while U.S. exports rebounded slightly. The Commerce Department said Thursday that the deficit fell a sharp 28.3 percent to $25.97 billion, the smallest deficit since late 1999. It was the seventh consecutive month the trade imbalance has declined, as the severe U.S. recession has sharply lowered demand for imports. For the first two months of the year, the deficit is running at an annual rate of $373 billion, about half the $681.1 billion imbalance recorded in 2008. Economists believe the trade deficit could remain at low levels for all of 2009 because the recession will not end until the second half of the year. In February, imports fell by 5.1 percent to $152.7 billion, the seventh consecutive month of declines. The drop was led by a 16.3 decrease in imports of crude oil, which fell to $10 billion, the smallest monthly total since early 2004. The average price of crude fell to $39.22 a barrel, down significantly from the record highs set last summer. Exports rebounded unexpectedly in February, rising by 1.6 percent to $126.76 billion, the first increase after six consecutive monthly declines. Despite the increase, exports are 16.9 percent below year-ago levels, as manufacturers face weak demand overseas. The politically sensitive deficit with China fell 31 percent to $18.9 billion in February, still the biggest trade imbalance with any country. The deficit with Japan fell to $2.2 billion, the lowest level in 24 years. The deficit with Canada—America's biggest trading partner—fell to $1.82 billion, the lowest level in more than 10 years.
