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The U.S. trade deficit rose an astonishing 22 percent in March to $109.8 billion as prices of oil and imported products rose due to soaring inflation, according to data released Friday by the Census Bureau and the Bureau of Economic Analysis.
The trade gap for February was revised up to $89.8 billion, making it the previous record high. January’s figure was $89.23, which was then a record high.
Economists had been expecting the deficit to hit $106.5 billion, according to Econoday.
Imports jumped 10.3 percent in March to a record $351.5 billion. The figures are not adjusted for inflation so much of the gain is likely due to higher prices and not solely caused by an increase in imports. Oil prices surged in March, contributing to the surge in nominal imports.
Exports were also up, rising 5.6 percent to $241.7 billion, also a record.
U.S. imports have surged in nominal terms as inflationary pressures have put the U.S. economy in a headlock. Strong demand from U.S. consumers, flush with excess savings from suppressed spending during the lockdowns and stimulus checks, pushed imports above $300 billion last fall. March was the fifth consecutive month above that highwater mark.
Exports have risen more slowly than imports because the economies of nations that buy U.S. goods and services have experienced more sluggish recoveries than the U.S. As a result, much of the deficit spending of the U.S. federal government, supported by record levels of government debt issuance, is being transferred as income to foreign producers. That deprives the U.S. government of tax revenue, decreases U.S. household income, and creates the need for more deficit spending or private sector debt to fill the income hole. Imports get subtracted from GDP and were a major reason the economy contracted in the first quarter of the year.
The surge in imports in the first quarter of the year also reflects a clearing of the backlog of goods that had been stuck on ships at U.S. ports, especially those near Los Angeles. Imports increased for finished metal shapes, passenger cars, computers, clothing, toys, and furniture. Exports of petroleum products, including crude oil and fuel oil, and natural gas rose in March.