The United States on Wednesday posted its worst trade deficit figures in the last six months, as exports saw its biggest fall since April 2020.
The latest trade figures, released by the US Commerce department, are a matter of worry for policymakers in the world’s largest economy, which is already bracing for a recession later this year.
As per the data, the trade deficit in April widened to a six-month high, as the shortfall grew by $14 billion to $74.6 billion. Data for March was revised to show the trade gap narrowing to $60.6 billion instead of the previously reported $64.2 billion.
Total exports fell 3.6 percent, the most since April 2020, to $249 billion in April 2023. That was the time when Covid-19 pandemic began to raise its ugly head across the world.
The decline in the exports of capital goods and consumer merchandise played a big role in the weak April data.
On the other hand, US imports rose 1.5 percent to $323.6 billion in April this year. Increase in the imports of motor vehicles and parts, industrial supplies, cell phones spiked the US import bill.
Moreover, the US government revised the goods trade data from 2018 while the trade services figures were revised from 2017.
While the decline in exports indicate that the world economy is slowing down, the rise in imports reflect that consumer spending in the United States has remained resilient.
Economists now expect that trade could chop off as much as 2.5 percentage points from gross domestic product this quarter. That is unless imports reversed course, a tall order given the persistent strength in domestic demand.
Meanwhile, the United States’ trade deficit with China, the world’s second-largest economy, continued to widen in April. The deficit with China widened to $24.2 billion from $22.6 billion in March.
(With agency inputs)