Deficit in the United States increases in September due to falling exports

The United States’ deficit in its foreign trade in goods and services increased by 11.2% in September and reached 80.9 billion dollars, due to the fall in exports, the Commerce Department reported on Thursday.

The September deficit is a new monthly record for the US economy.

“The global pandemic and economic recovery continued to affect international trade in September,” the official report said, referring to problems in global supply chains that are causing shortages in numerous sectors.

The value of US exports in September fell 3% to $ 207.6 billion; while that of imports grew slightly, 0.6%, reaching 288,500 million dollars.

After recording a deficit of $ 73.3 billion in August, analysts had expected a negative balance of around $ 75 billion in September.

The politically sensitive trade deficit with China in the US increased by $ 3.4 billion to $ 31.5 billion.

For its part, the US deficit with Mexico rose that month by 2.3 billion dollars and left the negative balance accumulated in the year at 8.8 billion dollars.

Recovery slower than expected

Economic activity in the United States showed the impact of the pandemic with negative figures on the growth of its gross domestic product (GDP) throughout the final three quarters of 2020.

However, the substantial economic stimulus provided by the Government resulted in a return to GDP growth in the start of 2021, which contributed to strong demand for imported goods.

In fact, in the middle of the year, the US recovered the economic level prior to the arrival of covid-19.

The expansion stopped between July and September, when it registered a growth of only 0.5%, due, among other reasons, to the impact of the delta variant of COVID-19 and the withdrawal of aid from the Executive.

In the previous three months, economic growth had been 1.6%.

Start of withdrawal of monetary stimulus

Although the United States appears to have left the worst of the economic crisis behind, there are still problems in the labor market and persistent inflation is generating concern.

The US Federal Reserve (Fed) will begin this month to dismantle the extraordinary monetary stimulus deployed to face the economic crisis caused by the pandemic, with the progressive reduction of its multimillion-dollar monthly bond purchase program.

This was indicated on Wednesday by its president, Jerome Powell, at a press conference after the agency’s monetary policy statement, which left interest rates in the range between 0% and 0.25% unchanged, and announced the start of the reduction of the bond purchase program by 15,000 million dollars a month.

Powell justified the decision by the “strengthening” and “substantial” improvement in the economy in recent months.

With this decision, the volume of monthly bond purchases, currently at $ 120 billion, would be progressively reduced with the aim of completely ending the program by mid-2022.

Regarding inflation, which closed September with an interannual rate of 5.4% and is the highest in 13 years, the US central bank acknowledged that it is “high” and more persistent than anticipated a few months ago.

However, he stressed that he continues to believe that it is due to factors that are “transitory”, such as problems in global supply chains and “strong demand”, and that it will moderate in mid-2022.

The latest forecasts from the Fed place economic growth in the US this year at 5.9%, and forecast inflation of 4.2%. (I)