The US economy is roaring as increased COVID-19 vaccinations and the White House’s $1.9 trillion pandemic rescue package boost domestic demand, a chunk of which is being satiated with imports. But trade deficit jumped 4.8% to a record $71.1 billion in February, the Commerce Department said on Wednesday. Economists had forecast a $70.5 billion deficit. The goods trade gap was also the highest on record.
When adjusted for inflation, the goods trade deficit shot up to a record $99.1 billion in February from $96.1 billion in January. The so-called real trade deficit is running well above the average for the October-December period.
Trade could subtract a full percentage point from GDP growth in the first quarter, which would be the third straight quarterly drag.But that is unlikely to make a dent on first-quarter GDP growth estimates, currently as high as a 10% annualized rate. The economy grew at a 4.3% pace in the fourth quarter.
Economists expect growth this year could top 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years. The International Monetary Fund is forecasting the global economy to expand 6% this year, driven primarily by the U.S. economy, which the fund estimated would grow by 6.4%.from the labor market to manufacturing and the hard-hit services industries, activity accelerated sharply in March.
High growth forecast and more stimulus on card , with widened trade deficit, poised for very high volatile market ahead.