America's trade deficit reached a 5-month high in August, creating tensions across party lines and setting the stage for another massive budget debate.
The United States’ trade deficit reached a five-month high in August after American exports dropped to their lowest level since June 2011. According to a report from Bloomberg, the U.S. imported more as weak growth abroad resulted in lower demand for American-shipped goods.
The deficit increased by 15.6 percent to $48.3 billion after a level of $41.8 billion in July. The Commerce Department reported the increase last Tuesday. Analysts cite a strong U.S. dollar and faltering of fast-growing economies like China as the main driver behind the decrease in demand for American made goods.
A steady demand for imported goods like mobile phones and clothing added to the country’s import list in August, which further contributed to the trade deficit’s increase.
According to Richard Moody, the chief economist at Regions Financial Corporation in Birmingham, AL, the drop in exports is the main factor in the widening gap. He fears that the deficit will slow the country’s overall economic growth.
In August, the U.S. imported $233.4 billion worth of goods, up 1.2 percent from a level of $230.6 billion in July. Mobile phones made up more than half of the increase in consumer spending on imports, while the import of capital goods rose $1.1 billion.
Falling oil prices continue to worsen the country’s deficit as well. Imports of petroleum in August were at their lowest level since September 2004, while exports reached their lowest level since October 2010.