U.S. deficit in July surges to 12 year highChristian Fernsby ▼ | September 4, 2020
The overall U.S. trade deficit in July widened to the highest level in 12 years as imports rose faster than exports, the U.S. Commerce Department reported Thursday.
The overall trade deficit rose by 18.9 percent to 63.6 billion dollars from a revised 53.5 billion dollars in June, according to the department. That was the largest monthly trade deficit since July 2008, during the 2007-2009 recession.
"As long as the spread of the virus remains under control abroad, we expect a gradual rebound in goods exports. But, the surge in imports may subside with a pullback in consumer goods demand," Shannon Seery, an economist at Wells Fargo Securities, wrote Thursday in a note.
"Services trade remains further off its pre-virus peak, and will likely take longer to recover," Seery wrote, adding trade is set to be a drag on U.S. economic growth in the near-term.
The U.S. economy contracted at a revised annual rate of 31.7 percent in the second quarter amid a mounting COVID-19 fallout, according to the department.
While the U.S. economy is likely to rebound in the third quarter, economists are warning that a recent resurgence in COVID-19 cases across the country could dampen consumer spending and investment, and weigh on the fragile recovery nationwide.
U.S. economic recovery remains "fragile," requiring further fiscal support to move into a "more sustained recovery" phase from the reopening phase, Loretta Mester, president of the Federal Reserve Bank of Cleveland, said Wednesday. ■