Trade Deficit Hits Record $38.5 Billion

The U.S. trade deficit soared nearly 10% in August as the value of imports jumped on higher oil prices and as firms stockpiled foreign goods amid a labor dispute at West Coast ports, government data showed Friday.

The trade gap mushroomed to a record $38.5 billion in August from $35.1 billion in July, the Commerce Department said. Exports fell for the first time in six months, and demand for foreign consumer goods pushed imports to their highest level since March 2001.

“We bought an awful lot more of everything in August, but unfortunately the rest of the world didn’t reciprocate,” said Joel Naroff of Naroff Economic Advisors in Holland, Pa.

Analysts said the larger trade gap may exert a drag on gross domestic product growth in the third quarter, but many other analysts are still projecting a strong rate of GDP expansion, about 4%.

A separate report from the Labor Department showed U.S. inflation was tame in September, with consumer prices rising only 0.2% overall and 0.1% in the closely watched core component that strips out food and energy costs.

The trade gap exceeded the average forecast of $35.6 billion that analysts gave ahead of the Commerce Department report. Excluding the U.S. surplus for services trade, the deficit for goods was $42.3 billion, also a record.

Analysts worry that the growing deficit in the current account, the broadest measure of trade because it also includes investment flows, is at risk of a disorderly correction that could trigger a slide in the dollar’s value.

U.S. officials repeatedly have dismissed this worry, calling the gap a sign of the United States’ economic strength and its appeal to foreign investors.