WASHINGTON DC: As economic activity in the United States recovers faster than that of its rivals, the nation’s trade deficit jumped 4.8% to a record high of $ 71.1 billion in February, the Commerce Department reported last week.
The expansion of the COVID-19 vaccine and the $ 1.9 trillion pandemic rescue package of the White House, part of which is fed up with imports, is expected to continue to drive domestic demand and driving growth this year.
President Joe Biden has proposed a $ 2 trillion infrastructure plan, which is likely to bring in even more imports and boost economic growth.
“The deficit could remain broad this year and next due to the fiscal stimulus and potential infrastructure package that could happen in the second half of this year,” said Ryan Sweet, senior economist at Moody’s Analytics. in West Chester, Pennsylvania, Reuters was quoted as saying. “As the economy continues to strengthen, this will keep the deficit wide.”
Exports fell 2.6% to $ 187.3 billion. Exports of goods fell 3.5% to $ 131.1 billion, led by capital goods shipments, which fell $ 2.5 billion, likely affected by an unexpected cold weather across the country.
Exports of consumer goods, motor vehicles, parts and engines, food and services, especially travel, declined.
Imports fell 0.7 percent to $ 258.3 billion. Imports of goods fell 0.9% to $ 219.1 billion, reflecting supply chain constraints, rather than weak domestic demand, while those of motor vehicles, parts and engines and consumer goods also declined. The reduction in trade flows in February was due, in part, to meteorological, logistical and transport problems at ports.
However, imports of capital goods reached a record high, driven by civil aircraft, medical equipment and electrical equipment, among others, while those of supplies and industrial materials were the highest since the October 2018, thanks to crude imports worth $ 1 billion. This caused the United States to record its first oil deficit since December 2019.
“With record low inventory and its affordability becoming more widespread thanks to rapid gains in house prices, we expect home purchase demand to drop this year,” said Matthew Pointon, senior economist at owned by Capital Economics in New York.