The US trade deficit hit an all-time high of $80.9 billion in September as American exports fell sharply while imports, even with supply chain problems at American ports, continue to climb.
The September deficit topped the previous record of $73.2 billion set in June, the Commerce Department reported Thursday. The deficit is the gap between what the United States exports to the rest of the world and the imports it purchases from foreign nations.
In September, exports plunged 3% to $207.6 billion while imports rose 0.6% to $288.5 billion.
Part of the weakness reflected a 15.5% drop in petroleum exports related to the drilling rig and refinery shutdowns during Hurricane Ida in the Gulf of Mexico. Economists expect that decline to reverse in the coming months with petroleum production coming back online.
The politically sensitive goods deficit with China shot up 15% in September to $36.5 billion. Through the first nine months of this year America’s deficit with China, the largest with any country, totaled $255.4 billion, an increase of 14.9% over the same period in 2020.
The overall trade deficit through September hit $638.6 billion, a 33.1% increase over the same period last year. That big jump reflects the surge in US demand for imports compares to last year when many parts of the economy were shut down because of the coronavirus.
In September, the deficit in goods rose to $98.2 billion, up a sharp 10% from the August deficit. The surplus in services, which covers such things as airline travel and financial services, rose 10.5% to $17.2 billion, still well below the levels seen before the pandemic hit. The surplus in services is expected to rise further as COVID-19 cases retreat and travel restrictions are eased.
The rising trade deficit subtracted 1.1 percentage points from growth in the July-September quarter, a period when the economy, as measured by the gross domestic product, slowed to an annual growth rate of just 2%, sharply lower than a GDP growth rate of 6.7% in the April-June period.
As COVID-19 cases retreat and the supply chain becomes untangled, the US trade deficit should start to improve in the coming months although the improvement may be modest, economists say.
“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,” Kathy Bostjancic, chief US financial economist at Oxford Economics, said.