Unemployment claims hit pandemic low, trade deficit hits record high

The Labor Department and Commerce Department reported new numbers regarding unemployment claims and the trade deficit respectively Thursday. The numbers show unemployment claims hit another pandemic low last week, and the United States’ trade deficit hit a record high last month.

“September exports were $207.6 billion, $6.4 billion less than August exports,” the Commerce Department said in its report. “September imports were $288.5 billion, $1.7 billion more than August imports.” When combined, those numbers make for a trade deficit of $80.9 billion. That topped the previous record of $73.2 billion set in June.

Thursday’s trade deficit numbers show a widening of the disparity between goods and services in the U.S. The goods deficit increased by $8.9 billion to $98.2 billion in September. Meanwhile, the services surplus also increased by $0.8 billion to $17.2 billion.

The U.S. goods deficit with China increased by even more than the total trade deficit, shooting up 15% in September to $36.5 billion. Through the first nine months of this year, America’s deficit with China totaled $255.4 billion. That’s an increase of 14.9% over the same period in 2020.

The overall trade deficit through September is now $638.6 billion. The 33.1% increase over the same period last year reflects the surge in U.S. demand for imports when many parts of the economy were shut down because of the pandemic.

Meanwhile, exports of petroleum dropped by 15.5%. This reflects drilling rig and refinery shutdowns in the Gulf of Mexico during Hurricane Ida. Economists expect that decline to reverse in the coming months with petroleum production coming back online. This, combined with expected declines in COVID-19 cases and the expected cleaning of supply chain bottlenecks, should help the trade deficit improve, according to economists.

“We look for the trade balance to remain historically elevated through year-end, but moderation in domestic demand will cool import volumes while steady vaccine diffusion and slower virus spread should underpin stronger export growth,” Chief U.S. Financial Economist at Oxford Economics Kathy Bostjancic said.

The new trade deficit numbers come as the Labor Department reported that last week’s initial unemployment claims were, “269,000, a decrease of 14,000 from the previous week’s revised level. This is the lowest level for initial claims since March 14, 2020”. In addition, the four-week average of claims dropped below 285,000. That’s also a pandemic low.

Initial claims have been dropping steadily since topping 900,000 in early January.