The US trade deficit rose to a record high in February, as the country's economic activity recovered more quickly than its global counterpart, and could remain high this year, with expectations of massive fiscal stimulus to spur the fastest growth in nearly four decades.
The economy is booming as coronavirus vaccinations increase and the $ 1.9 trillion pandemic rescue package provided by the White House boosts domestic demand, much of which is saturated with imports.
The Commerce Department said on Wednesday that the trade deficit jumped 4.8% to a record $ 71.1 billion in February. The goods trade gap was the highest ever.
Imports decreased 0.7% to $ 258.3 billion, and imports of goods decreased 0.9% to $ 219.1 billion. The decrease may reflect supply chain constraints, not weak domestic demand. Indeed, capital goods imports hit a record high, while imports of industrial supplies and materials were at their highest levels since October 2018.
In February, the United States recorded its first oil deficit since December 2019, most likely due to higher crude prices.
Exports fell 2.6% to $ 187.3 billion, while merchandise exports fell 3.5% to $ 131.1 billion, likely affected by unusually cold weather in large parts of the country.
Adjusted for inflation, the merchandise trade deficit jumped to a record $ 99.1 billion in February from $ 96.1 billion in January.
This indicates that trade could be subtracted from first-quarter GDP growth, which would be the third consecutive quarterly decline. But that is unlikely to have an impact on first-quarter GDP growth estimates, which are currently hitting 10% annualized rate. The economy had grown by 4.3% in the fourth quarter of 2020.
Economists expect growth this year to reach 7%, the fastest since 1984. The economy contracted by 3.5% in 2020, its worst performance in 74 years. The International Monetary Fund expects the global economy to expand 6% this year, mainly driven by the US economy, which the fund estimates will grow at 6.4%.