In September, the U.S. goods trade deficit dilated to a 2.5-year high due to a surge in imports, leading some economists to reduce their economic growth anticipations for the third quarter.
U.S. goods exports decreased by 2.0%, reaching $174.2 billion in the latest economic data. While exports of industrial supplies and capital goods also saw decrease, this downturn was largely influenced by a 6.3% drop in consumer goods shipments. However, offsetting some of the losses in other categories, exports of food products rose by 4.8%.
Following a 0.2% rise in August, wholesale inventories showed a slight dip of 0.1% in September. Retail inventories increase by 0.8% after a 0.7% gain in August on the other hand. The rise in retail inventories was driven by a 2.1% rise in motor vehicles and parts, which had previously seen a 1.1% rise in August. Retail inventories edged up by 0.1% after a 0.5% rise in August, excluding motor vehicles and parts.
As it feeds directly into the calculation of GDP, this inventory component is closely watched Carl Weinberg, chief economist at High Frequency Economics expressed concern over increasing retail inventories. “Although the increase is not significant, it indicates that consumer demand may not be aligning with retailers’ sales expectations,” he acclaimed.
It can still contribute positively to GDP growth in the short term, Weinberg added that while an inventory buildup suggests unsold stock. This phase change in exports and inventories signals potential adjustments in economic conditions.
Overstated sales projections by retailers, both of which may impact inventory strategies and overall economic performance in the coming months. The rise in retail stocks tempered consumer demand.
This decline in US trade has an impact on national level directly effecting import-export balance and distorting country’s GDP ration and economic growth.
Source: (Reuters)