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The numbers: The U.S. trade deficit fell 4.3% in July and pulled back from a record high owing to the biggest increase in exports in four months.
The trade gap slid to $70.1 billion from an all-time peak of $73.2 billion in the prior month, the government said Thursday.
Big picture: The U.S. trade deficit is running at a record pace this year. The economy has recovered more strongly compared to other countries, enabling Americans to buy more imports such as Japanese cars, Chinese-made iPhones or French wine.
The levels of U.S. imports topped pre-pandemic levels in March and has continued to hit new highs.
Exports have recovered at a slower pace and haven’t returned to pre-pandemic levels yet. The economies of other countries still haven’t caught up to the U.S.
The trade gap is likely to dwindle over the next year as other countries recover and seek out more American-made goods, but high U.S. international trade deficits have persisted for decades and they aren’t going away.
Read: Consumer confidence sinks to 6-month low on delta anxiety and inflation
Also: Inflation in the U.S. is running at the highest level in 30 years
Key details: Exports rose 1.3% to $212.8 billion, but they were still a bit short of pre-pandemic levels. The U.S. shipped more machinery, autos and auto parts to other countries
Imports slipped 0.2% to $282.9 billion. The U.S. imported fewer cell phones, consumer electronics and industrial supplies. Imports of autos rose, however.
U.S. companies ordered more consumer imports earlier than usual to make sure they had enough stock for the holiday shopping season at the end of the year. It’s possible they are starting to cut back now.
The trade gap in goods with China, meanwhile, declined to $25 billion from $27 billion. The deficit with China is on track to exceed 2020 levels, however.
Market reaction: The U.S. stock market
DJIA,
SPX,
rose in early Thursday action. The trade report usually has little impact on financial markets.
