A container ship is being guided by tugs out of the terminal of the Long Beach Port Complex in Los Angeles amid the coronavirus disease (COVID-19) pandemic in Los Angeles, California, the United States, on April 7, 2021.
Lucy Nicholson | Reuters
The US trade deficit hit a new record high in March as state-purged consumers fueled sustained demand for overseas-made goods.
With a new round of $ 1,400 in stimulus checks and the domestic economy continuing to improve significantly, the imbalance between goods and services and the rest of the world rose to $ 74.4 billion, the Commerce Department reported Tuesday.
This is the highest ever in a series of data going back to January 1992. This corresponds to an increase of 57.6% over the same period last year and is above the $ 70.5 billion in February.
The trade imbalance with China rose more than 22% to $ 36.9 billion. The deficit with Mexico rose 23.5% to $ 8.4 billion.
“Incentive has held American consumer spending through the pandemic, but restrictions on high-contact industries have redirected consumer spending from domestically produced services to goods, much of which is imported,” wrote Bill Adams, senior economist at PNC.
Exports actually rose $ 200 billion, or 6.6%, for the month. However, this was offset by continued demand for imported goods, which grew 6.3%, or $ 274.5 billion.
The deficit rose nearly 10% in 2021 alone, exploding from $ 47.2 billion in March 2020 as the U.S. entered the early days of the Covid-19 pandemic. Imports in 2021 rose 8.5% while exports fell 3.5%.
Adams said the shortfall is likely to decrease in the coming months as the recovery continues.
“As the US pandemic gets under control, American consumers will spend less on imported goods and imports will shrink. Foreigners will buy more US exports as their economies continue to recover,” he said.
In March, imports of consumer goods rose the most, up $ 4.5 billion, including a $ 1.2 billion increase in textile clothing and housewares. Industrial goods and material imports rose $ 3.7 billion and capital goods rose $ 3.3 billion.
Industrial goods and materials led exports by $ 5.2 billion, while capital goods rose $ 2.9 billion and consumer goods rose $ 2 billion.
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Correction: Textile apparel and housewares imports rose $ 1.2 billion in March. In an earlier version, the number was incorrectly specified.