The U.S. trade deficit in goods fell 6.2% in July from a record high, but it’s unlikely to portend even bigger declines in the months ahead.
The U.S. economy, the world’s largest, has recovered from the pandemic faster and more strongly compared to other countries. As such American can afford to buy more imports. Citizen elsewhere can’t.
The result: Soaring U.S. imports and a weaker recovery in American exports.
The trend partly reversed in July. Goods imports slipped 1.4% to $233.9 billion from a record high in the prior month.
The sale of American exports, meanwhile, rose 1.5% to $147.6 billion.
Record deficits are widely expected to subside once the global pandemic is over, but they are likely to remain quite high. The U.S. simply doesn’t produce many of the goods that consumers clamor for and other countries like China have become major suppliers of the materials such steel and minerals that American businesses need to produce their wares.
A trade deficit subtracts from gross domestic product, the official scorecard for the economy. The full report on the July trade balance will be released next week.
The government on Friday also said wholesale inventories increased 0.6% in July while retail inventories arose 0.4%, based on an “advanced” looked at early data.
The U.S. stock market
was set to open higher in Friday action. The trade report usually has little impact on investors.