America’s trade deficit widened to more than $67 billion in August, rising to its highest level in 14 years, the Census Bureau reported on Tuesday.
The deficit has rapidly expanded from $37 billion in February, before the Covid-19 pandemic swept across the country and sunk the US economy.
Foreign trade was hit hard by lockdown efforts, and exports still haven’t recovered to their pre-pandemic levels, experts said.
“The turnaround in the economy’s fortunes from the quickest downturn in history has seen consumers and businesses rushing out to buy more imported goods while America’s trading partners are buying less of ours and this has led the monthly deficit to explode to near record levels,” said Chris Rupkey, chief financial economist at MUFG.
The last time the trade deficit was higher was in August 2006.
The deficit has increased nearly every month since the spring lockdown, with only one month-on-month decrease in June. This trend will weigh on economic growth in the third quarter, said economists at Citi said in a note to clients.
The Federal Reserve Bank of Atlanta’s GDPNow model is forecasting a 35.3% jump in the annualized, seasonally adjusted economic growth rate. While that’s a massive rebound, the economy still has a long way to go to get back to where it was pre-pandemic. Moody’s Analytics and CNN’s Back-to-Normal Index is now at 80%.