The numbers: The U.S. trade deficit in goods soared almost 18% in March to a record $125.3 billion, reflecting America’s huge demand for imported goods and rising prices tied to high inflation.
An early or advanced look at the trade gap in goods showed that it rose sharply from $106.3 billion in February, the Census Bureau said. That was also a record.
Wall Street economists had forecast a small decline in the trade deficit.
Imports have repeatedly set new monthly records since 2021, largely because the U.S. economy recovered rapidly from the pandemic. High inflation has become a big factor lately as well.
American ports have also sought to unload a huge backlog of imported goods sitting in cargo ships offshore. The big increase in imports suggests the congestion is easing.
Last year, the U.S. posted the largest trade deficit ever. The goods deficit topped $1 trillion for the very first time.
Exports have rebounded more slowly, but they have also risen to all-time highs.
An advanced estimate of wholesale inventories, meanwhile, showed a 2.3% increase in March. Retail inventories rose 2%, according to an early estimate.
Businesses are trying to restock low inventories and keep up with strong demand for their goods and services.
“Imports continue to be supported by strong demand from U.S. businesses to restock inventories,” said economist Katherine Judge at CIBC Economics.
Big picture: U.S. trade deficits subtract from gross domestic product, the official scorecard for the U.S. economy.
Economists predict GDP grew just 1% in the first quarter following a 6.9% gain in the final three months of 2021. The preliminary report comes out Thursday.
The sharper-than-expected increase in retail and wholesale inventories normally would spur some economists to raise their forecasts. Higher inventories add to GDP. Yet the increases were offset by the higher-than-expected trade deficit.
Whatever the case, the economy is still expanding at a steady pace, and it’s mostly been mostly undisturbed by ups and downs in the trade numbers.
Key details: U.S. imports of oil, autos and consumer goods such as cell phones jumped 11.5% to a record $294.6 billion in March.
Higher oil prices help explain part of the increase in the U.S. trade deficit. Prices jumped after the Russian invasion of Ukraine and have remained around $100 a barrel — up fivefold from two years ago.
Exports of American-made goods shot up 7.2% to $169 billion.
The full trade report for March, which includes services such as tourism and travel, comes out next week.
Looking ahead: “We expect the deficit to remain well above the pre-pandemic trend over coming months,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
Market reaction: The Dow Jones Industrial Average
DJIA,
+0.56%
and S&P 500
SPX,
+0.25%
were set to open higher in Wednesday trades.
