WASHINGTON: The US trade deficit surged to a record high in February as the nation’s economic activity rebounded more quickly than that of its global rivals and could remain elevated this year, with massive fiscal stimulus expected to spur the fastest growth in nearly four decades.
The economy is roaring as increased COVID-19 vaccinations and the White House’s $1.9 trillion pandemic rescue package boost domestic demand, a chunk of which is being satiated with imports. President Joe Biden last week proposed a $2 trillion infrastructure plan, expected to pull in even more imports and fire up economic growth.
The trade deficit jumped 4.8% to a record $71.1 billion in February, the Commerce Department said on Wednesday. Economists polled by Reuters had forecast a $70.5 billion deficit. The goods trade gap was also the highest on record.
Exports dropped 2.6% to $187.3 billion. Exports of goods tumbled 3.5% to $131.1 billion, likely hurt by unseasonably cold weather across large parts of the country. The decline was led by shipments of capital goods, which decreased $2.5 billion.
Consumer goods exports fell as did those of motor vehicles, parts and engines. There were also fewer food exports. The pandemic remained a drag on services exports, especially travel.
Imports slipped 0.7% to $258.3 billion. Goods imports fell 0.9% to $219.1 billion. The drop likely reflected supply-chain constraints, rather than weak domestic demand. Indeed, imports of capital goods hit a record high, boosted by civilian aircraft, medical equipment and electric equipment among others.
Imports of industrial supplies and materials were the highest since October 2018, thanks to $1 billion worth of crude oil imports. That resulted in the United States recording its first petroleum deficit since December 2019.
But imports of motor vehicles, parts and engines decreased as did those of consumer goods. The reduction in trade flows in February was partly due to harsh weather, logistic and transportation problems at ports.
A separate report from the Mortgage Bankers Association (MBA) on Wednesday showed applications for loans to buy a home fell 4.6% last week, dropping for a second straight week. According to the MBA, the 30-year mortgage fixed rate has risen to 3.36%, a 10-month high. That, combined with higher house prices due to an acute shortage of properties, is making home-ownership more expensive for some first-time buyers.