U.S. trade deficit widens as imports set a record

http://www.usatoday.com/money/economy/story/2012-05-10/march-trade-deficit/54871710/1

Updated 5/10/2012 9:56 AM

WASHINGTON – The U.S. trade deficit rose in March at the fastest rate in 10 months.

A rise in consumer goods lifted imports to a record level, outpacing a solid gain in U.S. exports.

The Commerce Department said Thursday that the trade gap widened to $51.8 billion in March, from $45.4 billion in February. Imports rose 5.2% to a record $238.6 billion, reflecting more foreign oil, autos, cell phones and clothes.

A rising trade deficit slows a nation's growth. It means the country is spending more on foreign-made products than it is taking in from sales of U.S.-made goods.

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http://useconomy.about.com/od/tradepolicy/p/Trade_Deficit.htm

Why an Ongoing Trade Deficit Weakens the Economy:

An ongoing trade deficit is detrimental to the nation’s economy over the long term because it is financed with debt. In other words, the U.S. can buy more than it makes because the countries that it buys from are lending it the money. It's like a party where you’ve run out of money, but the pizza place is willing to keep sending you pizzas and put it on your tab. Of course, this can only go on as long as there are no other customers for the pizza, and the pizza place can afford to loan you the money. One day the lending countries may decide to ask the U.S. to repay the debt. On that day, the party is over.