US Trade Balance Deficit Widened. The United States (US) trade balance deficit widened in February 2024. This is the third widening deficit in a row.
The US Department of Commerce reported that the goods and services trade deficit widened 1.9% from the previous month to US$68.9 billion, the largest deficit in almost a year.
The US trade balance deficit is also higher than the median estimate of economists in a Bloomberg survey which estimated a deficit of US$67.6 billion. The value of imports rose to nearly US$332 billion due to increases in mobile phones, food and motor vehicles.
Meanwhile, the value of exports increased to US$263 billion, driven by shipments of civil aircraft and crude oil. The Commerce Department figures are not adjusted for inflation.
A wider trade balance deficit throughout this year is expected to erode gross domestic product (GDP) for the first time since early 2022.
Prior to the release of the trade balance data, GDPNow estimates from the Federal Reserve Bank of Atlanta showed trade value reducing almost half a percentage point from growth in the first quarter of 2024.
Although the US trade balance has improved since 2022, demand for imported goods may remain high given strong consumer spending and inventories that are increasingly in line with sales.
Additionally, the risk of recession in overseas markets is holding back demand for US exports. On an inflation-adjusted basis, the merchandise trade deficit widened to US$87 billion in February, the largest since July 2023.
The trade balance deficit in US goods trade with China narrowed to US$21.9 billion, the smallest value in the last three months, following a decline in the value of imported goods.
