The US trade deficit hit a record high in February
© Reuters. FILE PHOTO: Imported cars are parked in a large parking lot in Newark New Jersey Harbor
By Lucia Mutikani
WASHINGTON (Reuters) – The U.S. trade deficit hit a record high in February as the country’s economic activity recovered faster than that of its global rivals and could continue to rise this year. Massive fiscal stimulus should spur the fastest growth in nearly four years.
The economy is roaring as increased COVID-19 vaccinations and the White House’s $ 1.9 trillion pandemic rescue package boost domestic demand, some of which is saturated with imports. Aggressive government intervention and the ultra-light monetary policy of the Federal Reserve have shown a robust growth path for the economy.
The trade deficit rose 4.8% in February to a record $ 71.1 billion, the Commerce Department said on Wednesday. Economists polled by Reuters had forecast a deficit of 70.5 billion US dollars. The gap in goods trading was also the largest ever recorded.
Imports fell 0.7% to $ 258.3 billion. Goods imports fell 0.9% to $ 219.1 billion. The decline likely reflected supply chain constraints rather than weak domestic demand. Indeed, imports of capital goods hit a record high, while those of industrial goods and materials were the highest since October 2018.
“Cargo ships have had to anchor outside the ports of Los Angeles and Long Beach, where about a third of all imports are handled, as the ports have difficulty unloading incoming ships,” said Jay Bryson, chief economist Wells Fargo (NYSE 🙂 Securities in Charlotte, North Carolina.
The United States recorded its first oil deficit since December 2019 in February, likely due to higher crude oil prices.
Exports fell 2.6% to $ 187.3 billion. Goods exports fell 3.5% to $ 131.1 billion, likely negatively impacted by unusually cold weather in much of the country.
Adjusted for inflation, the goods trade deficit rose from $ 96.1 billion in January to a record $ 99.1 billion in February. The so-called real trade deficit in the period October to December is well above the average.
This suggests that trade could pull away from GDP growth in the first quarter, which would be the third straight quarterly burden. However, this is unlikely to affect Q1 GDP growth estimates, which are currently at an annualized rate of 10%. The economy grew 4.3% in the fourth quarter.
Economists expect growth this year could top 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, its worst performance in 74 years. The International Monetary Fund is forecasting global economic growth of 6% this year, mainly driven by the US economy, which the fund estimates will grow 6.4%.
From the labor market to the manufacturing sector to the service industry that has been hardest hit, activity accelerated sharply in March.
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