August Trade Deficit Rises as Nothing Stands in Way for $1 Trillion Goods Deficit in 2021
By Kenneth Rapoza, Coalition for a Prosperous America (CPA)
Oct 5, 2021
The August goods and services trade deficit for August rose by $3 billion to $73.3 billion, showing that dispute supply chain disruptions, consumer demand for goods, U.S. dependence on imports, and record stimulus will combine to deliver a $1 trillion goods deficit in 2021, based on data from the U.S. Bureau of Economic Analysis (BEA), released on Tuesday.
The goods deficit for the month of August was $88.16 billion, up from July’s revised number of $86.9 billion, on a Census-weighted basis. And even though August’s difference between U.S. exports and imports was not a record-breaker for the year, the January to August goods deficit is now $715.79 billion. If the next four months each post a $72 billion monthly goods deficit, then the total year-ending deficit for goods would be $1.004 trillion. To put that into perspective, the entire Mexican economy produced $1.07 trillion in GDP in 2020. The U.S. trade deficit in goods alone would be equal to the size of the entire Mexican economy. If just a quarter of those goods were produced here, think of the impact it would have on the U.S. economy – it would grow the manufacturing base and increase America’s middle class.
“The size of our goods deficit, along with the severe supply chain disruptions which are creating a scarcity of new autos and many other goods, and the skyrocketing prices for shipping and key commodities from oil to silicon make it plain that the only way to achieve a truly resilient U.S. economy is to begin making more products here in the U.S.,” commented CPA chief economist Jeff Ferry.
August exports totaled $213.7 billion, up $1 billion from July. And August imports were $287 billion, up by around $4 billion from July imports.
Overall, the August increase in the goods and services deficit reflected an increase in the goods deficit of $1.6 billion and a decrease in the services surplus of $1.4 billion to $16.2 billion. Services exports include things like foreign students in U.S. education institutions, intellectual property fees, financial services, and international business consulting fees.
Year-to-date, the overall deficit (goods and services) rose 33.7% over 2020. Exports did go up, rising 17.5%. But imports rose even more, up 21.2% so far this year compared to last year.
August’s Biggest Trade Gaps ...
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