Economists had expected the U.S. trade deficit in goods to narrow to $105.0 billion in March after growing to a record-high $106.3 in February.
That turned out to be very far off-base.
The Census Bureau said Wednesday that the deficit in goods jumped 17.8 percent to a record $125.3 billion in March. That broke February’s record.
As the U.S. economy recovered rapidly from the pandemic and the Federal Reserve has begun raising interest rates, the dollar has strengthened against foreign currencies. The dollar’s strength against foreign currencies makes imports relatively cheaper. As well, a tight labor market in the U.S. and ongoing supply chain troubles are driving up costs for U.S. manufacturers. A report from the Richmond Fed on Tuesday showed manufacturers in the Mid-Atlantic region report costs of raw materials have increased 11.83 percent from a year ago.
The Biden administration has refused to take action to protect U.S. goods producers from foreign manufacturers taking advantage of a tight U.S. labor market, inflation, dollar strength, and supply chain problems to capture U.S. market share.
Last year, the U.S. trade deficit gapped out to its widest ever. The deficit in goods exceeded $1 trillion for the first time ever.
Exports rose in March by 7.7 percent. But imports were up by 11.5 percent.
The figures are not adjusted for inflation so they partially reflect rising prices and not just more goods hitting U.S. shores.
The advanced estimate of wholesale inventories and retail inventories rose in March. Wholesale inventories climbed 2.3 percent and retail inventories rose two percent. Both inventories builds were bigger than expected and the prior month was revised up for both wholesale and retail. Businesses have been trying to restock inventories but say they are facing shortages and challenges due to snarled supply chains and shipping delays.
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