Economic Forecasts

Trade: Decline in Exports Widens Deficit to New Record

Kiplinger's latest forecast on the direction of the trade deficit.

U.S. exports of consumer goods will gain momentum as the global economy continues to improve this year. But in February, total exports fell 2.6%, after increasing steadily over several prior months. Goods exports fell 3.6%, partly because of the global semiconductor shortage, which hampered American automakers’ foreign sales. Services exports continued to struggle amid restrictions related to COVID-19, falling 0.4% for the second consecutive month. Total exports remain well below their prepandemic level.

The U.S. trade deficit widened in February to a seasonally adjusted $71.1 billion, from a revised $67.8 billion in January — an increase of 4.8%. The appreciation in the U.S. dollar and a shift in consumer spending from services to goods are the main driving forces of the larger trade deficit. The U.S. economy has simply bounced back faster than most of its trading partners, resulting in imports outpacing exports. Widespread vaccinations this year will result in a slight shift in household consumption away from goods toward services, which will gradually moderate the amount of imported goods flowing into the United States.

February actually saw a slight dip in imports to the United States: They fell 0.7%. A 10.7% decline in autos and parts, and a 4.2% decline in consumer goods imports led the decline in overall goods imports. Still, import growth is on track to outpace exports in the first quarter of 2021. As other advanced economies emerge from the pandemic, that pattern will likely reverse over the rest of the year.

Sources: Department of Commerce, Trade Data

Most Popular

11 Good Reasons to Cancel Amazon Prime

11 Good Reasons to Cancel Amazon Prime

You probably aren't using most of the perks tucked into that $119 annual fee -- which you don't need to pay to get the free Amazon shipping you crave.
April 13, 2021
Who Should Return Their Third Stimulus Check to the IRS?
Coronavirus and Your Money

Who Should Return Their Third Stimulus Check to the IRS?

Some people who receive a third stimulus check are required to send it back to the IRS. Others can return it voluntarily.
April 12, 2021
2021 Child Tax Credit Calculator
Tax Breaks

2021 Child Tax Credit Calculator

See how much money you'll get in advance under the new child tax credit rules for 2021.
April 14, 2021