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The numbers: The U.S. trade deficit in goods fell slightly in September a month after hitting a record high, but it’s likely to remain elevated in the next few months as retailers restock ahead of the holiday shopping season.
Economists polled by MarketWatch had forecast a small increase in the trade gap to $83.5 billion.
Big trade deficits subtract from gross domestic product, the official scorecard for the U.S. economy. Although trade was a small drag on third-quarter growth, a huge surge in consumer spending and a rebound in business investment are expected to fuel a record 30%-plus increase in GDP.
The government will publish the results on Thursday morning.
Read:Record 30% surge in GDP is coming, but it may be too late to help President Trump
What happened: Exports rose 2.7% in September to $122 billion, largely reflecting an increase in shipments of farm products as well as capital goods.
Exports are still lagging well below precrisis levels, however. Many other countries have been slower to recover from the pandemic or the disruptions in trade that it caused, reducing demand for U.S.-made products. Although American manufacturers have expanded for five months in a row, exports are still a soft spot for the economy.
Imports of foreign goods such as autos and consumer electronics, meanwhile, slipped 0.2% in September to $ 201.4 billion, the U.S. Census Bureau said Wednesday.
Imports are now back to pre-pandemic levels and that’s actually good news in many ways. It shows businesses and consumers are more confident and that the U.S. economy is regaining strength.
Read:U.S. durable-goods orders climb 1.9% as manufacturers grow for fifth straight month
The advanced trade report only includes goods. Services such as travel and tourism — some of the industries hardest hit by the pandemic — aren’t included until the full report that gets released next week.
An advanced look at wholesale inventories, meanwhile, showed a 0.1% decline in September. And an early look at retail inventories pointed to a robust 1.6% increase.
The big picture: U.S. trade deficits are poised to stay extremely high in the short run given the slower economic recovery in many other parts of the world. Americans can afford to buy more foreign goods — and have become more reliant on them.
The slower recovery in exports, for its part, will act as a small drag on the ongoing recovery in U.S. manufacturing.
What’s less clear is how the latest outbreak of coronavirus cases in the U.S., Europe and other countries will affect the global trading system. Few countries are likely to adopt the same strict lockdown measures they did last spring, but the outbreak is bound to cause harm.
Market reaction: The Dow Jones Industrial Average DJIA, -0.80% and S&P 500 SPX, -0.30% were set to open lower in Wednesday trades.
