By Arionne Nettles
The U.S. trade deficit rose sharply to $48.33 billion in August as the impact from the strong dollar and weakening global economy dampened exports.
The Commerce Department reported an August trade balance of $48.33 billion, up 15.5 percent from a revised $41.86 billion in July. August exports fell $3.7 billion to $185.1 billion while imports increased $2.8 billion to $233.4 billion.
The widening gap was due to more American purchases of overseas goods, such as cell phones from China, as the stronger U.S. dollar gave Americans more buying power.
“Part of the widening appears to be due to a surge in imports of mobile phones and household goods, which probably relates to the release of the new iPhone,” Josh Wright and Carl Riccadonna, analysts for Bloomberg Intelligence, wrote in a note.
But the strong dollar made U.S. goods more expensive on the world market. Exports of goods decreased 3.2 percent to $124.5 billion in August. Industrial supplies and materials including fuel oil, plastic materials and crude oil accounted for $2.2 billion of the decline. Exports of services including financial services and travel edged higher by 0.66 percent to $60.6 billion.
Imports of goods increased 1.3 percent to $192.4 billion in August driven by a $4.0 billion increase in consumer goods. Imports of services increased 0.73 to $41.1 billion.
Because of the increasing trade gap, economists lowered their estimates for economic growth in the third quarter. For example, Bank of America Merrill Lynch lowered its Q3 GDP growth forecast Monday to 2 percent from a previous 2.8 percent. The U.S. economy grew by 3.9 percent in the second quarter.
“The global economy is slowing down and the U.S. can’t depend on the growth of other countries,” said Adolfo Laurenti, chief international economist at Mesirow Financial. “We are on our own.”