WASHINGTON: The US trade deficit rose in August with imports overwhelming exports as the US economy bounces back from last year’s pandemic shock, government data said yesterday. The Commerce Department reported the trade deficit climbed to $73.3 billion from the upwardly revised $70.3 billion the month prior, more than analysts had expected and 4.2 percent higher than in July.
Both exports and imports increased, but fewer car and airplane sales held back the former, while consumer demand fueled the rise in the latter, according to the data. The overall deficit was a new record high and $31.7 billion larger than before the pandemic, said Mahir Rasheed of Oxford Economics, who predicted it would widen “slightly further” by the end of the year as vaccine inequality and supply snarls global growth.
“Moderating domestic demand will continue to slow import volumes over the coming months, while a steady pick up in foreign consumption will drive stronger exports” in the fourth quarter, he added. Overall, imports rose $4 billion to $287 billion from July, while exports climbed to $213.7 billion, an increase of $1 billion. Imports of both goods and service increased, with consumer goods rising $3 billion and industrial supplies and materials rising $1.8 billion.
Automobiles fell $1.5 billion amid an ongoing shortage of semidconductors that has hurt assembly lines worldwide. Among exports, goods increased a total of $1.1 billion, with industrial supplies and materials rising $3.5 billion. However, that could not overcome a $1 billion drop in automobiles and $0.8 billion fall in capital goods, which includes aircraft, among other shortfalls. Services exports saw a slight decrease.
US Treasury Secretary Janet Yellen warned yesterday that a US debt default could trigger another recession, as an October 18 deadline approaches. “I totally expect it would cause a recession,” Yellen said on CNBC, referring to what would be an unprecedented US default as lawmakers fight over raising the debt ceiling. Yellen has warned previously that after October 18, the United States will not have the funds to meet its obligations to creditors if Congress does not relax the legal debt ceiling. Congress has done this dozens of times over the decades since setting borrowing limits, and the votes are usually bipartisan and drama-free.
This year, reflecting the extraordinary acrimony in Washington, Republicans are refusing to vote for lifting the ceiling and vow even to block Democrats from passing a simple vote by themselves along party lines. Instead, Senate Republicans are attempting to force Democrats to use a complex maneuver called reconciliation to take sole responsibility for the debt hike. Democrats so far are refusing, accusing the Republicans of taking the nation’s financial standing hostage. President Joe Biden on Monday called Republican opponents “reckless and dangerous” for refusing to join Democrats in raising the debt limit. – AFP