The numbers: The U.S. trade deficit climbed 6.7% in June to an all-time high, reflecting a big appetite among Americans for imports. Higher prices for oil and other goods also played a role.
The trade gap widened to $75.7 billion from $71 billion in the prior month, the government said Thursday.
Imports rose 2.1% to $283.4 billion and also set a new record. Americans are snapping up more foreign cars, computers, cell phones, clothes, alcohol and other goods.
Oil imports have also risen sharply as Americans get back on the road and gasoline prices have gone up.
Exports edged up 0.6% to $207.7 billion, but they still haven’t returned to their the pre-pandemic peak.
Big picture: The U.S. has run international trade deficits for decades and is on track to set a new record in 2021. A trade deficit subtracts from gross domestic product, the official scorecard for the economy.
The record surge is not all negative, though. The chief reason it’s rising so fast is because the U.S. economy has rebounded more rapidly from the coronavirus pandemic than other countries. Americans can afford to buy more imports.
The trade gap is expected to shrink once other economies improve, but annual deficits are likely to remain high. The U.S. simply doesn’t produce many of the goods that Americans clamor for.
What they are saying? June’s record trade deficit could be the peak for the year,” said senior economist Bill Adams of PNC Financial Services.
“U.S. services spending has risen faster than goods spending in the last few months as people have become more comfortable venturing out of the house. Services are almost all domestically-produced, so the shift of consumption away from goods and toward services reduces the trade deficit,” he said. “In addition, foreign demand for U.S. exports should grow rapidly in the next few quarters.”