U.S. Trade Deficit Widens to All-Time High
October 6, 2021
The gap between American imports and exports reached a record high in August, adding to the mounting evidence that economic growth has slowed in the third quarter.
The trade deficit surged 4.2% to $73.3 billion, the highest level since the Commerce Department started tracking the data. Economists had forecast a small increase to $70.5.
The trade deficit for goods climbed by $1.9 billion to an inflation-adjusted total of $101.8 billion in August. Imports climbed 1.1% to $239.1 billion, as American consumers purchased more pharmaceuticals and recreation items like toys and sporting goods. Imports of industrial materials also increased. When including imports of services, which grew moderately amid ongoing travel restrictions through much of the world, total imports climbed 1.4% to $287 billion, the highest on record.
Trade has had a negative impact on GDP growth for the past four quarters, and it appears that the streak will continue when third-quarter GDP figures are released later in the month. The Atlanta Fed’s current forecast shows growth slowing substantially to a 2.3% annualized rate, down from a 6.7% pace during the second quarter.