Consumer Demand Drove U.S. Imports to Record High in March
Consumers and a fresh round of stimulus money pushed demand for U.S. imported goods to a record high in March, further expanding the trade deficit.
The foreign-trade gap in goods and services expanded 5.6% from the prior month to a seasonally adjusted $74.4 billion in March, the Commerce Department said Tuesday.
Imports rose 6.3% to $274.5 billion for the month, fueled by higher shipments of items including toys, furniture, cellphones, automobiles and semiconductors. The previous record for imports, on a seasonally but not inflation adjusted basis, was recorded in October 2018 when the U.S. purchased foreign goods and services worth $266.72 billion.
Exports rose 6.6% to $200 billion in March, following a one-month decline in February, as supply-chain disruptions caused by winter weather eased.
Economists surveyed by The Wall Street Journal had predicted a trade deficit of $74.8 billion in March.
The increase in March imports and the trade deficit came as the economic recovery in the U.S gathered steam, thanks to government-stimulus spending, Covid-19 vaccination efforts and a fuller reopening of the economy from pandemic-related restrictions.
U.S. household income rose by 21.1% in March, the Commerce Department reported last week, the largest monthly increase for government records tracing back to 1959. Consumer spending also was up sharply, increasing 4.2%. The federal government in March distributed $1,400 stimulus checks to individuals as part of a $1.9 trillion stimulus package signed into law in March.
Exports remained well below pre-pandemic levels in March but are on a recovery path as the global economy continues to emerge from the pandemic’s impact. March exports of goods were the highest since May 2018, with the shipments of industrial supplies and materials at the highest level on record.
Economists expect the trade deficit to remain high in the coming months as the U.S. economy recovers more robustly than most other parts of the world. That should keep imports growing vigorously, outpacing recoveries in U.S. exports, economists say.
Port of Long Beach Executive Director Mario Cordero said strong consumer demand for imports from Asia has caused a shortage of containers for American exports as well as a doubling of the cost of trans-Pacific container shipments from a year ago.
“What is happening is international carriers are rushing to have those containers sent back to Asia to bring back more imports,” Mr. Cordero told lawmakers during a House Ways and Means Committee hearing last week. “These containers, which we don’t have enough of, are not being held here for American exports.”
In March, the U.S. deficit in trade in goods with China, the largest U.S. trading partner, widened sharply to $36.9 billion from $30.2 billion in February. Imports from China surged 19% to $48.3 billion, while exports to the country rose 8.6% to $11.3 billion.
As strong consumer appetite for goods kept American factories humming, imports of semiconductors—critical components of products ranging from autos to washing machines—grew 26% from February to $6.3 billion.
“For all the talk of supply disruptions in the global semiconductor industry holding back U.S. production, particularly in the auto sector, this highlights that much of the problem is instead the huge and unanticipated rebound in demand,” Andrew Hunger, senior U.S. economist for Capital Economics, said in a research note.
U.S. exports of semiconductors to the rest of the world also rose in March to $5.24 billion, up 8.5% from February.
The strong pickup in U.S. international commerce came despite the impact created from the Ever Given container ship, which was stuck in the Suez Canal in late March, holding up traffic in the busy passageway.
As commerce in goods expanded strongly, trade in services also recovered, albeit at muted paces. With trade restrictions remaining in place, exports of services grew by $0.8 billion to $57.1 billion in March from the prior month. Imports of services increased $1.1 billion to $40 billion.