US budget gap hits record $1.7trn for first half of year

Bloomberg

The US federal budget deficit more than doubled to a record in the first half of the fiscal year amid a fresh wave of stimulus payments to cushion Americans from the persistent coronavirus pandemic.
The deficit last month was $659.6 billion, the third-largest on record and biggest since last June, swelling the total from October to March to $1.71 trillion, according to a Treasury Department report. The six-month total compares with $743.5 billion in the prior-year period. In March 2020, the deficit was $119 billion, which didn’t reflect the first wave of payments in the Cares Act approved late that month.
The March 2021 outlays included $339 billion in the direct pandemic-relief payments — of up to $1,400 per person — authorised under the $1.9 trillion American Rescue Plan bill passed last month. With additional payments in train, that law will widen the fiscal gap by more than $1 trillion this year and over half a trillion in fiscal 2022, according to the Congressional Budget Office.
While fiscal hawks worry that the deficit-fuelled spending will boost inflation and make the US less desirable for investors, sentiment in Washington has shifted, with diminished worries relative to decades past. Interest rates have remained low globally for decades, offering more room for government spending.
Even so, in a nod to long-term deficit worries, the president’s proposed $2.25 trillion infrastructure-and-jobs package includes a hike in the corporate-tax rate, and a planned wave of new social spending is likely to include higher levies on wealthy individuals.
Total spending in the first half of the fiscal year was $3.41 trillion, double the level of revenue. A year ago, spending over six months reached $2.35 trillion against receipts of $1.6 trillion.
For March, outlays totaled $927.2 billion, up from $355.8 billion a year earlier. Revenue rose less dramatically, to $267.6 billion from $236.8 billion.

US trade deficit widened to $71.1bn in February
The US trade deficit widened in February to a record high as solid household and business demand kept imports running ahead of shipments to overseas customers.
The gap in trade of both goods and services increased to $71.1 billion in February from a revised $67.8 billion a month earlier, according to Commerce Department data. The median estimate in a Bloomberg survey of economists called for a $70.5 billion shortfall. A decline in exports exceeded a drop in the value of imports during the month as severe winter weather disrupted two-way trade.
The US deficit has been widening fairly consistently on a monthly basis since reaching a more than three-year low in February 2020. Merchandise imports have been pouring into the nation’s ports, leading to shipping container shortages that have driven up freight rates and left domestic producers scrambling at a time when inventories are lean.
Global supply chains were put to test in late March after a massive container ship blocked the Suez Canal for days, forcing carriers and other vessels to weigh costly and time-consuming
voyages around Africa.
Total imports decreased 0.7% to $258.3 billion, while exports fell 2.6% to $187.3 billion.
Meantime, a global shortage of semiconductors has been causing automakers like Ford Motor Co. and Nissan Motor Co. to scale back production, further impacting global trade.
The value of imported semiconductors was little changed at $5 billion in February, while exports of the chips dropped more than $400 million to $4.8 billion.
Imports of motor vehicles and consumer goods declined in February, while the value of industrial supplies, that include oil, increased.
The merchandise-trade deficit rose about 3% to $88 billion, while the nation’s surplus in services trade fell to $16.9 billion, the smallest since 2012.