The U.S. trade deficit rose to a new record in August amid strong demand for imported consumer goods and industrial supplies.
The Commerce Department reported Tuesday that the trade gap surged 4.2% to $73.3 billion, beating economists’ expectations of a $70.5 billion deficit. The previous record was set in June with a $73.2 billion shortfall.
Imports rose 1.4% in August to $287 billion, also a record high, reflecting higher shipments of consumer goods, as well as industrial supplies by business customers. Exports increased 1.5% to $213.7 billion.
“There is a huge backlog of foreign-made consumer goods waiting to get into the U.S. supply chain, on ships waiting to be unloaded at U.S. ports, at foreign ports waiting to get onto those ships, and at foreign factories waiting to get to port,” said Bill Adams, a senior economist at PNC Financial. “That will keep goods imports high through at least November.”
“There is a huge backlog of foreign-made consumer goods waiting to get into the U.S. supply chain, on ships waiting to be unloaded at U.S. ports, at foreign ports waiting to get onto those ships, and at foreign factories waiting to get to port.”
But economists believe the pace of the increase in imports is likely to slow in coming months as U.S. consumer demand cools down. High inflation sharply cut into consumer spending in July, with a moderate rebound in August.
“With most other economies still behind the U.S. in their recovery from the pandemic, and domestic consumption growth slowing, we still think goods exports will start to catch up with imports soon,” Andrew Hunter, senior U.S. economist for Capital Economics, wrote in a client note.
Following the trade report, the Atlanta Fed cut its third-quarter gross domestic product estimate to a 1.3% annualized rate from a 2.3% pace.
The economy grew at a 6.7% pace in the second quarter. Trade has subtracted from GDP growth for four straight quarters.
The August data showed strong demand for imported goods such as pharmaceutical products, toys and clothing. But according to Reuters, “a global shortage of semiconductors which is hampering production at auto plants resulted in imports of motor vehicles, parts, and engines decreasing $1.5 billion.”
Exports of vehicles and parts fell 8%.
On the services side, pandemic-related restrictions pushed down spending by foreign visitors in the U.S., while travel spending by Americans overseas increased.