Here’s Why the U.S. Trade Deficit Is Widening
Data released on Wednesday morning show that the U.S. trade deficit increased in July. The U.S. Census Bureau reported a July deficit of $39.1 billion, an increase of $4.6 billion or 13.3 percent, from $34.5 billion in June. Total exports in July declined by $1.1 billion to $189.4 billion and total imports increased $3.5 billion to $228.6 billion. July’s deficit was approximately in line with economist expectations of $39 billion.
While the trade gap widened sequentially in July, it is still low relative to the same period last year. Compared to July 2012, exports are up by 3.3 percent and imports are up by 0.8 percent, while the total deficit is down by $4.3 billion. June’s deficit was particularly narrow, making the comparison difficult. July’s trade gap was in line with the three-month moving average of $39.1 billion.
At a glance, the trade data is consistent with what other economic indicators have suggested over the past few months. America’s domestic economy is recovery at a slow but steady clip, generating a reasonable amount of demand for imports, while a slower recovery in Europe has generally dampened exports.