U.S. Trade Deficit Widens In August, Imports Rise

The U.S. trade deficit reached a new record in August supported by increased imports of pharmaceuticals and toys, even as supply chain bottlenecks continue to disrupt trade. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis said announced today that the goods and services deficit was $73.3 billion in August, up $2.9 billion from $70.3 billion in July, revised.

August exports were reported as $213.7 billion, $1.0 billion more than July exports. Meanwhile, August imports were recorded as $287 billion, rising 1.4% or $4 billion more than July imports.

The reopening of the economy has led to a higher shipment of consumer goods and industrial materials.

Last week, the government reported that the personal consumption expenditures (PCE) price index climbed rose to its highest level since 1991, to 4.3% in August from a year ago. Analysts attributed this rapid hike in inflation indicators to the reopening of the economy, leading to a surge in demand at a time when supply shortages ravage industries.

The U.S. economy has continued to rebound at a resilient pace from the pandemic-driven lockdown, than other countries, due to massive fiscal stimulus, low interest rates, and a high level of coronavirus vaccinations. Americans can afford to buy more imports. 

U.S. imports rebounded in August owing to stronger consumer demand after a brief pullback earlier in the summer. 

Partial shutdowns of ports due to a surge in infections at the docks threaten an already struggling shipping system. This, along with labor shortages, is crippling the supply chain.

The International Chamber of Shipping and other transportation industry groups wrote a joint letter to the United Nations General Assembly last week stating that the rising consumer demand could lead to more delays ahead of Christmas and continue into 2022.

Picture Credits: Port of Long Beach