The numbers: The U.S. trade deficit in goods rose in March for the third month in a row and hit another record high, but the upsurge mostly stems from the American economy recovering faster than other countries.
The advanced trade gap in goods climbed 4% to $90.6 billion in March, the U.S. Census Bureau said Wednesday.
An advanced look at wholesale inventories, meanwhile, showed a 1.4% increase in March. And an early look at retail inventories revealed a 1.4% decline.
What happened: U.S. imports of goods jumped 6.8% to a record $232.6 billion in March.
Americans are buying more goods generally during the pandemic and foreign producers of food, drinks, consumer electronic, autos and industrial supplies have all been big beneficiaries.
U.S. exports increased 8.7% to $142.1 billion.
Exports have recovered more slowly than imports because the economies of other countries haven’t recovered as rapidly as the U.S. The result has been softer demand for U.S. goods.
The government will release overall trade numbers for March next week, but the size of the trade deficit is generally tied to changes in exports and imports of goods. Trade patterns involving services rarely change much from month to month.
A higher deficit subtracts from gross domestic product, the official scorecard for the U.S. economy.
Big picture: Trade is one of the few areas that has been a relative weak spot in terms of GDP, but strong consumer and business spending have easily offset the drag. The government on Thursday is expected to report that GDP surged 6.5% in the first quarter.
What they are saying? “The goods deficit will show up as a drag on GDP in the first quarter of 2021, but the goods deficit will start to shrink by the end of 2021 and into 2022,” said senior economist Bill Adams of PNC Financial Services.
“As the pandemic comes under control in the United States, American consumers will spend less on imported goods, shrinking imports,” he added. “A nd foreigners will buy more US exports as their economies recover further.”