As exports fall, U.S. trade deficit balloons to five-month high
Container ships at the Port of Los Angeles on June 29.
The rising value of the dollar and the slowing global economy caused exports to drop in August, pushing the U.S. trade deficit to its widest level in five months.
The nation imported $48.3 billion more in goods and services than it exported in August, a nearly 16% increase from the previous month’s deficit, the Commerce Department said Tuesday.
Exports took a big hit as the stronger dollar meant U.S. products were more expensive to purchase abroad.
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The nation exported $185.1 billion worth of goods and services in August, down $3.7 billion from the previous month.
The August figure was the lowest since October 2012.
Exports of services were actually up slightly in August. The big decline was in goods, including fuel oil and industrial supplies, which fell to their lowest level since 2011.
At the same time, imports increased by $2.8 billion in August, to $233 billion.
Patrick Newport, U.S. economist at IHS Global Insight, said a wider trade deficit normally signals slower economic growth.
“The trade sector will continue to hold back growth for the next two years since the dollar continues to strengthen and since the effects of a strong dollar take several quarters to filter through into prices and quantities,” he said.
The August report probably will shave between 0.5 and 1 percentage point off of total economic output in the third quarter, Newport said.
The economy expanded at a healthy 3.9% annualized rate in the second quarter. But estimates for the third quarter are well below 2%.
The U.S. economy has been stronger than those of most other nations, which has pushed up the value of the dollar sharply in recent months.
Also, in late August, China devalued its currency. The trade deficit with China widened in August by $4.2 billion, to $32.9 billion.
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