Chicago Daily Observer

The U.S. trade deficit narrowed in August as the retreat in oil prices cut the import bill.

The gap shrank 3.5 percent to $59.1 billion, close to economists’ forecasts, a Commerce Department report today in Washington showed. Exports fell to the second-highest level on record. Sliding energy costs also sent the cost of imported goods down the most since 2003 last month, the Labor Department said.

In addition to crude oil, imports of automobiles, computers and televisions also dropped as the deepening financial crisis caused American consumers and businesses to retrench. Federal Reserve policy makers anticipate that with turmoil spreading through the global economy U.S. exports may also wane.

U.S. consumer spending rose more than forecast in May as tax rebates drove the biggest gain in incomes in almost three years, enabling households to at least temporarily overcome soaring fuel bills.

The 0.8 percent rise in purchases was the biggest since November, as Americans bought furniture, clothes and electronics after filling their autos’ gas tanks, the Commerce Department said today in Washington. Incomes grew 1.9 percent, the most since September 2005, and measures of inflation were lower than anticipated.