US trade deficit jumps to fresh record in September as exports plunge
Gap between what the US buys from, sells to other countries surged in September
Investors predict COVID reopening trades to continue dominating markets
Fidelity Investments' John Gagliardi and SlateStone Wealth chief market strategist Kenny Polcari discuss market movement as the pandemic drags on uncertainty.
The U.S. trade deficit hit a fresh record of $80.9 billion in September, driven by a surge in imported goods that far outpaced exports, government data showed on Thursday.
The Commerce Department said that the gap between what the U.S. buys from other countries and what it sells to foreign nations surged by 11.2%, topping the previous record of $73.2 billion in June.
FILE - ,Cargo containers sit stacked at the Port of Los Angeles, Wednesday Oct. 20, 2021 in San Pedro, Calif. California Gov. (AP Photo/Ringo H.W. Chiu / AP Newsroom)
In September, exports plummeted 3% to $207.6 billion as supply chain disruptions caused congestion in ports and warehouses. Exports may have been lower than usual because of a 15.5% drop in petroleum exports related to refinery shutdowns caused by Hurricane Ida in September. That trend is expected to reverse itself in coming months as petroleum production returns to its normal levels.
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Imports, meanwhile, rose 0.6% to $288.5 billion, the highest monthly total on record as Americans bought more foreign-made goods like computers, electrical equipment, cellphones and industrial supplies.
The overall trade deficit through September surged to $638.6 billion, a 33.1% increase compared to the year-ago period. The surge reflects pent-up consumer demand for goods after the coronavirus pandemic forced large swaths of the economy to shut down last year.
Cargo containers sit stacked on container ships at the Port of Los Angeles, the nation’s busiest container port, on October 15, 2021 in San Pedro, California. As surging inflation and supply chain disruptions are disrupting global economic recovery, (Getty Images)
The U.S. good deficit with China hit $36.5 billion in September – a 15% increase from the previous month. Over the first nine months of the year, America's deficit with China totaled $255.4 billion, an increase of 14.9% from the same period last year.
Experts say that as COVID-19 cases continue to fall and supply-chain disruptions begin to abate, the U.S. trade deficit should begin to improve – though it may remain elevated through the end of the year.
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"We look for the trade balance to remain historically elevated through year-end, but moderation in domestic demand will cool import volumes while steady vaccine diffusion and slower virus spread should underpin stronger export growth," Mahir Rasheed, an economist at Oxford Economics, said.