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U.S. Deficit Tops And Stays Above $1 Trillion #GotBitcoin?

The deficit, up 19% compared with a year ago, has exceeded $1 trillion for the first time since 2012. U.S. Deficit Tops And Stays Above $1 Trillion #GotBitcoin?

The U.S. budget gap widened to more than $1 trillion in the first 11 months of the fiscal year, the Treasury Department said Thursday, the first time deficits have topped that amount in seven years.

U.S. Deficit Tops And Stays Above $1 Trillion #GotBitcoin?

Higher spending on the military, rising interest expenses on government debt and weak revenues early in the fiscal year combined to push the deficit up 19% from October through August, compared with the same period a year earlier. Government spending climbed 7%, to $4.1 trillion, outpacing higher federal tax receipts, which grew 3%, to $3.1 trillion.

That brought the total deficit to $1.07 trillion so far in fiscal 2019, which started Oct. 1, or 4.4% as a share of gross domestic product.

A strong economy typically leads to narrower deficits, as rising household income and corporate profits help boost tax collections, while spending on safety-net programs such as unemployment insurance tends to decline.

The U.S. economy has been growing for 10 years as of July, the longest economic expansion on record. Yet annual U.S. deficits are on track to exceed $1 trillion starting this year, due in part to the 2017 tax law, which constrained federal revenue collection last year, and a 2018 budget deal that busted spending caps enacted in 2011.

Senior Treasury officials attributed this year’s higher deficit primarily to a surge in government spending, and emphasized that federal revenues have climbed nearly 7% since May, in large part reflecting a robust economy and low unemployment. Corporate tax revenue in particular has rebounded in recent months, after a period when analysts were unsure why it was running below Congressional Budget Office projections.

Still, revenue growth has continued to lag the broader economy, and is below where forecasters projected it would be prior to the 2017 tax cuts.

Federal spending has continued to climb. The Treasury said Thursday spending on the military and interest costs on government debt each rose 9% from October through August, and Medicare expenses increased 10%.

More broadly, annual deficits are projected to more than double as a share of the economy over the coming decades, as a wave of retiring baby boomers pushes up federal spending on retirement and health-care benefits.

Those deficits have led the Treasury to ramp up borrowing in recent years. The government said it expected to borrow more than $1 trillion for the second year in a row in 2019.

Updated: 9-26-2019

Senate Passes Short-Term Spending Measure

Stopgap bill would keep government open through Nov. 21 as lawmakers try to pass new annual spending legislation.

The Senate passed a short-term funding measure to stave off a possible government shutdown after the end of the month, sending the legislation to President Trump’s desk just days before the end of the federal fiscal year on Sept. 30.

The stopgap bill, which passed the House last week, would keep the government open through Nov. 21 as lawmakers of both parties try to pass new annual spending legislation. A White House official said Mr. Trump would sign the temporary bill by Oct. 1, but the exact timing was unclear. The bill also extends a number of health-care programs and other expiring measures, including the National Flood Insurance Program.

The bill’s passage Thursday came as talks on the yearlong spending bills run into a familiar obstacle: deciding how much money to allocate for building a wall along the U.S.-Mexico border. Entrenched partisan disagreement over money for the wall led to the longest government shutdown in U.S. history, which ended this year after 35 days.

Those already difficult negotiations will now also have compete with the beginning of a formal impeachment effort in the House. Lawmakers will leave Washington at the end of this week for a two-week recess, giving them less than two months when they return to arrive at a compromise.

While the House, controlled by Democrats, has passed the vast majority of its spending bills, the GOP-controlled Senate hasn’t approved any bills on the e floor. Republicans in the Senate held off on writing individual spending bills this summer as the Trump administration and Congress first negotiated overall spending levels and raising the debt ceiling. The House and Senate will need to reconcile any differences between their bills before they can send them to the president.

Progress in the Senate has slowed as Republicans push to pass $5 billion more in wall funding and Democrats object to approving any money for a border wall. Democrats are also opposing bills that don’t curtail the president’s ability to redirect federal funds to the wall, opening another front that will affect a broader swath of spending bills.

“This is a waste of taxpayer dollars and bad for our country,” said Sen. Patrick Leahy (D., Vt.), the top Democrat on the Senate Appropriations Committee. “It is not about solving real problems, it is about fulfilling a campaign promise.”

Mr. Trump declared a national emergency in February after Congress didn’t approve the level of wall funding he had sought, allowing him to pull money from the military to build the wall. That maneuver has earned bipartisan condemnation, as 11 Republicans joined Democrats in the Senate on Wednesday to approve a resolution that would block the president’s re-designation of funds. The resolution is expected to pass the House Thursday, while the White House has indicated it will veto the bill.

Senate Majority Leader Mitch McConnell (R., Ky.) and Senate Minority Leader Chuck Schumer (D., N.Y.) have traded partisan jabs over spending in recent weeks. Each has blamed the other for putting partisan politics above the necessary task of funding the government, including the military.

“My Democratic colleagues who don’t support the administration’s border security agenda should not take out their frustration on our armed forces,” Mr. McConnell said.

Even as party leaders battle, however, staff for the Appropriations Committees in the House and Senate have begun discussions on how to allocate money between the various spending bills. Senate Appropriations Chairman Richard Shelby (R., Ala.) is set to meet Friday with Mr. Trump to discuss how to avoid another shutdown.

“We’re going to be discussing overall the situation as it exists as we see it in the appropriations process and discuss, I hope, how to move it,” Mr. Shelby said.

Updated: 10-4-2019

Trade Gap Widened in August

Deficit rose to $54.9 billion as Americans bought more goods from abroad, exports grew too.

The U.S. trade gap widened in August as American consumers bought more cellphones and other goods from abroad while businesses exported more oil and autos, a sign of the economy’s resilience amid a global economic slowdown.

The trade deficit in goods and services increased 1.6% from a month earlier to a seasonally adjusted $54.9 billion in August, the Commerce Department said Friday.

The report offered a reassuring sign about the overall health of the U.S. economy and the willingness of Americans to spend despite a spate of weak manufacturing data, cooling global growth and uncertainty around the U.S.-China trade war.

“The good thing about the report is you want to see exports and imports growing.” said Joel Naroff, president of Naroff Economic Advisors.

The growing trade gap, however, will hold down U.S. economic growth in the third quarter slightly, analysts said. Jim O’Sullivan, chief U.S. economist at High Frequency Economics, estimated trade would shave about 0.2 percentage point from the annualized growth rate in the July to September period.

The report presents a mixed assessment of the progress of the president’s trade policies that are aimed, in part, at narrowing the trade deficit between the U.S. and its major trading partners, especially China.

The trade gap with China shrunk slightly in August. U.S. goods exports to China picked up, owing to Beijing’s resumption of agricultural purchases in recent months. Chinese companies had largely halted purchases from U.S. farmers amid the trade tensions but have gradually resumed those purchases in a bid to get toward a deal.

U.S. exports of foods, feeds and beverages to China climbed to $1.5 billion in August, the best month since January of 2018, and up from $1.2 billion in July.

The Trump administration has imposed a series of increasingly steep tariffs on imports of Chinese goods, causing Beijing to retaliate. Talks have so far not produced a comprehensive agreement.

U.S. and China’s trade negotiators are meeting next week in Washington for the first round of high-level talks since July.

The president’s goal of persistently narrowing the trade gap, however, has proved elusive.

Overall exports were up 0.2%, driven by a 3.4% increase in exports of industrial supplies, particularly fuel oil. Automobile exports also rose 2.7% to $14.28 billion, the highest level since July 2014.

But imports grew faster—climbing 0.5% in August from July, driven by a 3.4% increase in consumer goods imports on the month to $57.23 billion, the highest level on record. Imports of cellphones alone were up 13.3% in August from July, Commerce reported.

The report also highlights once again the diverging economic outlooks between U.S. households and businesses, particularly manufacturers. Household spending remains relatively strong. It grew 2.3% in August over the previous year after adjusting for inflation, the Commerce Department reported in September.

Factories, on the other hand, are struggling. Imports of industrial supplies, mostly commodities, declined 3.3% in August from July and are down 8.3% over the first eight months of 2019 versus the same period in 2018. Imports of capital goods such as computers or machines ticked up slightly in August but remain down about 1% year-to-date.

An index of new orders for manufacturing exports has pointed to declining activity for three straight months and in September hit the lowest level since March 2009, according to the Institute for Supply Management. That could signal a decline in overall exports in the September trade report, expected Nov. 5.

Overall factory activity also fell for the second straight month, the group said, which has led U.S. firms to cut back on orders from overseas suppliers.

Similar surveys in Europe and Asia released earlier this week also pointed to a manufacturing slowdown.

That has been holding down U.S. exports of manufacturing equipment. Capital goods exports are down 1.6% so far in 2019 over the same period in 2018. That decline is mostly driven by a fall in exports of civilian aircraft, a possible consequence of the grounds of the Boeing 737 MAX.

The bleak global trade picture could persist through the end of the year. The World Trade Organization said Tuesday it expected international trade in goods to grow by just 1.2% this year, the lowest annual increase since 2009.

The U.S. said Wednesday it would impose tariffs on $7.5 billion in aircraft, food products and other goods from the European Union after the WTO authorized the levies Wednesday, citing the EU’s subsidies to Airbus SE.

Updated: 10-25-2019

Trump Is Indeed Making America Great Again. Greatly In Debt That Is!

U.S. Annual Budget Deficit Nears $1 Trillion With 26% Rise

The U.S. budget deficit widened to almost $1 trillion in the latest fiscal year, surging to the highest level since 2012 as President Donald Trump cut taxes and boosted spending.

The federal government’s gap increased by 26% to $984 billion in the 12 months through September, representing 4.6% of gross domestic product, the Treasury Department reported Friday. The fourth straight increase confirms that the deficit under Trump is on pace to expand to historic levels.

The GOP tax-cut package will cost $1.5 trillion over a decade, and few economists outside the administration expect it will continue to fuel growth. The deficit — which has little precedent at these levels outside recessions or wartime — is set to widen further as spending increases for mandatory programs and interest payments.

The ballooning gap has stirred vigorous debates over how much the government can borrow and spend without driving up interest rates or inflation. At the same time, price gains and yields remain historically low despite the expanding deficit, which was as low as 2.2% of GDP under Trump’s predecessor, Barack Obama.

For the 12-month period, spending rose 8.2%, the most since 2009, totaling $4.45 trillion on increased outlays for the military, health care and education. Revenue advanced 4% to $3.46 trillion, helped by $70.8 billion in customs duties. For September alone, the surplus was $82.8 billion, compared with $119.1 billion a year earlier.

“President Trump’s economic agenda is working,” Treasury Secretary Steven Mnuchin said in a statement accompanying the release. “In order to truly put America on a sustainable financial path, we must enact proposals — like the president’s 2020 budget plan — to cut wasteful and irresponsible spending.”

By contrast, Leon Panetta, a former budget director under President Bill Clinton, said in a statement issued by the deficit-hawk group Committee for a Responsible Federal Budget, where he is co-chair: “Instead of getting our fiscal house in order and preparing for the next downturn, our leaders continue to binge on debt-fueled tax cuts and spending hikes rather than showing the leadership necessary to set our fiscal path.”

The non-partisan Congressional Budget Office has forecast that the deficit will top $1 trillion in 2020, with estimates showing a shortfall of about $1.2 trillion each year over the next decade. That would amount to nearly 5% of total gross domestic product, a measure that puts the deficit in context of the overall economy.

Election Campaign

Trump’s 2020 election bid is beginning to ramp up and he’s eager to show that his three-pronged economic agenda of tax cuts, deregulation and new trade deals have spurred growth. However, key indicators, such as business investment in equipment and machinery, have cooled lately despite incentives from tax policy. In addition, the trade tariffs are causing businesses to become hesitant with spending, while research has shown that the tax cuts are most favorable to higher-income Americans.

The president has repeatedly blamed the Federal Reserve for hampering the economy by raising interest rates too high last year and failing to cut quickly enough. The central bank is projected by economists to cut interest rates next week for the third time in three months. Officials may also telegraph that they are likely to pause for some time before making another rate move.

Fed Chairman Jerome Powell has repeatedly warned that the U.S. is on an unsustainable fiscal path. But economists are revisiting traditional ideas about how much debt can be issued, and markets don’t appear worried.

Democratic candidates seeking to challenge Trump in 2020 are pushing plans to widen access to health care and education that could cost trillions of dollars. And yields on U.S. Treasuries have fallen sharply this year to the lowest level since 2016 amid a weaker growth outlook as well as investors seeking better returns than even lower-yielding bonds from overseas.

Tariff Revenue

The deficit may have exceeded $1 trillion had it not been for the trade war with China, where Trump has escalated levies over the past year. The customs-duties revenue represented a 71% increase from 2018, as American companies paid more at the border for Chinese imports, steel and other goods. While the countries came to a preliminary agreement that’s delayed at least one planned increase in levies, current tariffs aren’t being rolled back yet.

Government outlays have provided a sizable boost to U.S. GDP amid a slowdown in business investment. Federal spending rose at an annualized pace of more than 5% in the first half of the calendar year, more than double growth in the economy as a whole, according to the Commerce Department. That was helped particularly by military spending.

The tax cuts have also been credited with helping juice economic growth last year. Yet the effects of the reductions have since faded.

Even without the tax cuts and higher defense spending, outlays are increasing at a relatively fast clip. Mandatory allocations, which include Medicare and social security payments, are growing amid an aging population and with one of the world’s least efficient health-care systems. Interest payments are also adding up, now comprising about 8.4% of total outlays.

Updated: 11-13-2019

U.S. Budget Gap Hits $1 Trillion Over Past 12 Months

Deficit widened 34% to $134 billion in October.

The U.S. budget gap grew 34% in the first month of the fiscal year as federal spending outpaced revenue growth, pushing the 12-month deficit past $1 trillion for the first time since February 2013.

The government ran a $134 billion budget deficit in October, the Treasury Department said Wednesday. Federal outlays totaled $380 billion, an 8% increase from a year earlier and a record for the month, driven by higher spending on the military, health care and Social Security.

Receipts last month totaled $246 billion, a 3% decline from last year, which the Treasury attributed in large part to a shift in the timing of certain payments.

If not for those calendar quirks, revenue would have grown 2% in October from a year earlier, and the deficit would have widened 19% in the first month of fiscal year 2020, the Treasury said.

Over the past 12 months, the government collected $3.4 trillion in revenue and spent $4.4 trillion, bringing the total deficit to just over $1 trillion, or 4.8% of gross domestic product.

After briefly eclipsing $1 trillion in August, the U.S. budget deficit came in just shy of $1 trillion for the 2019 fiscal year, which ended Sept. 30, thanks to a late surge in corporate tax revenue. Annual deficits have been climbing since 2016, despite a period of low unemployment and sturdy economic growth, as tax cuts enacted in 2017 weighed on federal revenue collection and a bipartisan budget deal boosted federal spending levels.

Last year marked the fourth year in a row that budget deficits have widened, the longest stretch of deficit growth since the early 1980s, when the unemployment rate was near 11%. Deficits usually shrink during economic expansions as rising household income and corporate profits boost revenue, while spending for safety-net programs, such as unemployment insurance or food stamps, declines.

Revenue from customs duties, or tariffs, increased 39% to $2 billion last month, reflecting the higher tariffs the Trump administration has imposed in recent months. That was offset by a decline in excise taxes, which a senior Treasury official attributed part to a moratorium on a fee the government collects from health-care providers under the Affordable Care Act.

Spending on the military and on the Department of Health and Human Services—including Medicare and Medicaid spending—rose 8% in October. Interest payments on the debt, one of the fastest-growing parts of the federal budget, declined 4% last month from a year earlier, reflecting falling borrowing costs as the Federal Reserve cut interest rates, a Treasury official said.

The government typically runs a deficit in October, which includes no major tax payment deadlines for individuals or corporations.

More broadly, the government is projected to continue running trillion-dollar deficits over the coming decade, as a wave of retirees pushes up mandatory spending on Social Security and Medicare.

Updated: 1-13-2020

U.S. Budget Gap Continued To Widen In 2019

Federal deficit totaled $1.02 trillion over the 12 months that ended in December.

The U.S. budget gap continued to widen in 2019, but not as much as the previous year when Republican tax cuts reduced revenue and a bipartisan budget deal boosted government spending.

The federal deficit totaled $1.02 trillion over the 12 months that ended in December, according to data the U.S. Treasury released Monday. That marked the first calendar year the deficit has exceeded $1 trillion since 2012, when the U.S. was still experiencing anemic economic growth after the recession.

December was also the third month in a row that the U.S.’s year-over-year deficit topped $1 trillion.

The deficit grew 17.1% in 2019, compared with a 28.2% increase in 2018.

The smaller increase in the deficit was due in large part to a rebound in corporate tax revenue, which shrank more than expected in the wake of the tax cuts. Total receipts grew 5% in 2019, compared with a 0.4% decline the previous year. The government collected $3.5 trillion over the past 12 months, up from $3.3 trillion in 2018.

Federal spending, however, continued to outpace tax revenues: Outlays rose 7.5% to $4.5 trillion last year, compared with a 4.4% boost in 2018 that brought total federal spending to $4.2 trillion.

Over the past 12 months, deficits as a share of the U.S. economy totaled 4.7%, compared with 4.2% the previous 12 months.

A strong economy typically leads to narrower deficits, as rising household income and corporate profits help boost tax collections, while spending on safety-net programs such as unemployment insurance tends to decline. Instead, U.S. deficits have been rising in recent years, prompting the Treasury to issue more debt.

The government said it expected to borrow more than $1 trillion for the second year in a row in 2019.

Higher federal spending on the military and health care pushed up outlays last year, while a stronger economy and rising wages helped bolster individual and corporate tax receipts, along with higher customs duties, or tariffs, imposed by the Trump administration. Those trends have continued into the current fiscal year, which began Oct. 1.

The budget gap widened 12% to $357 billion in the first three months of fiscal 2020, the Treasury said Monday in its monthly report on spending and tax collection. Outlays rose 7% to $1.2 trillion, while federal receipts were up 5% to $807 billion.

More broadly, annual deficits are projected to more than double as a share of the economy over the coming decades, as a wave of retiring baby boomers pushes up federal spending on retirement and health-care benefits.

Updated: 2-12-2020

U.S. Budget Deficit Grew 25% in First Four Months of Fiscal 2020

Budget gap totaled $1.06 trillion over past 12 months.

The federal budget deficit grew 25% in the first four months of the fiscal year, largely as a result of a quirk in the calendar that brought forward payments of federal benefits, such as veteran and retiree benefits.

The U.S. budget gap totaled $389 billion from October through January, compared with $310 billion in the same period a year earlier, the U.S. Treasury Department said Wednesday. Federal outlays rose 10%, to $1.6 trillion, and federal tax receipts grew 6%, to $1.2 trillion—both record highs for the four-month period.

Spending rose sharply because Feb. 1, the date on which certain benefits are paid, fell on a Saturday, shifting those payments into January. If not for that shift, the deficit would have been only 6% larger, and receipts and outlays each would have risen 7%.

Higher federal spending on the military and health care—which rose 9% and 15%, in the first four months of the fiscal year—continued to boost government spending, while low unemployment and sturdy economic growth have helped bolster individual and corporate tax receipts. Individual withheld taxes rose 5% from October through January, while corporate tax revenues, which have been rising since last summer, were up nearly 27%, the Treasury said.

Over the 12 months that ended in January, receipts rose 6.7%, the most since February 2016. Outlays were up 8.8%, pushing the overall deficit to $1.06 trillion, a 16.4% increase from a year earlier. January was also the fourth month in a row that the U.S.’s year-over-year deficit topped $1 trillion.

As a share of gross domestic product, year-over-year deficits were 4.9%, compared with 4.3% in the previous 12 months. That was the highest deficit/GDP ratio since May 2013, when the unemployment rate was 7.5% and real GDP grew just 0.12% from the previous quarter.

The unemployment rate, at 3.6% in January, is trending near a 50-year low, and the economy grew 2.3% last year, in line with the average pace of growth during the 10-year expansion.

Deficits typically narrow when the economy is strong, as rising household income and corporate profits bolsters government revenue, and spending on safety-net programs such as unemployment insurance declines. Instead, deficits have been rising in recent years amid a surge in government spending and weaker-than-expected receipts following the tax cuts enacted in 2017.

The White House budget released Monday projected deficits will narrow slightly to $966 billion in 2021 if its policy proposals are implemented, and continue to shrink until annual deficits are eliminated by 2035. But its projections are based on rosy assumptions about economic growth, and the path of revenues and spending.

The Congressional Budget Office said last month deficits are expected to exceed $1 trillion a year for at least the next decade and likely beyond, driven higher by rising costs of entitlement programs such as Medicare and Social Security as the population ages and health-care costs rise. Deficits as a share of economic output are expected to more than double.

Even those forecasts may be too low: CBO’s forecasts are based on the assumption that there are no changes to current spending and tax laws. President Trump’s 2021 budget proposal calls for extending the tax cuts for individuals, set to expire in 2025, and Democrats on the presidential campaign trail are advocating ambitious policy proposals—the Green New Deal, Medicare for All—that could cost trillions of dollars if enacted.

Updated: 3-11-2020

U.S. Budget Deficit Grew 15% in First Five Months of Fiscal Year, Treasury Says

The U.S. budget deficit totaled $625 billion in period as government revenue rose 7%.

The U.S. budget deficit totaled $625 billion in the first five months of this fiscal year, a 15% increase over the same period in 2019, the U.S. Treasury reported Wednesday.

The deficit grew by $235 billion in February, roughly on par with February 2019. The U.S. fiscal year begins in October.

Government revenue rose to $188 billion in February, a 12% increase over the same month in 2019. For the whole five-month period, revenue rose 7% to $1.37 trillion, thanks to a strong economy that fattened payrolls and delivered wage gains.

Spending is also up this fiscal year, climbing 9% to $1.99 trillion. The rise in spending was largely driven by outlays in health care and Social Security spending as well as more spending on the military and veterans’ affairs.

Deficits typically narrow when the economy is strong, as rising household income and corporate profits bolster government revenue, and spending on safety-net programs such as unemployment insurance declines. Instead, deficits have been rising in recent years amid a surge in government spending and weaker-than-expected receipts following the tax cuts enacted in 2017.

The government expects the deficit to hit $1.08 trillion this fiscal year, up from $984 billion during the 2019 fiscal year.

Updated: 5-5-2020

U.S. March Trade Deficit Widened as Coronavirus Disruptions Spread

Coronavirus pandemic disrupted supply chains world-wide, depressed consumer spending.

The U.S. trade deficit widened in March as the economic shock related to the global coronavirus pandemic held down both imports and exports.

The deficit rose 11.6% to a seasonally adjusted $44.4 billion in March from $39.8 billion in February, snapping two months of declines, the Commerce Department said Tuesday. Imports declined 6.2% to $232.2 billion in March, the lowest figure since October 2016. Exports were down 9.6% to $187.7 billion, the lowest since November 2016.

The March trade numbers are likely to be the beginning of a sustained fall in global trade, said Brad Setser, a senior fellow at the Council on Foreign Relations. The coming months will probably show a continuing decline in U.S. imports and exports, he said.

“It’s safe to project that April will see a much bigger fall and there’s not likely to be a significant recovery in May,” Mr. Setser said.

Separate surveys of purchasing managers found that U.S. services businesses saw their steepest drop in activity in April since the last recession.

The Institute for Supply Management’s nonmanufacturing index fell to 41.8 in April, down from 52.5 in March and the lowest reading since March 2009. And the private data firm IHS Markit said its U.S. services index—a survey-based measure of activity in industries such as finance, hotels and transportation—saw its sharpest one-month decline since the survey began in October 2009, falling to a seasonally adjusted 26.7 in April from 39.8 the prior month.

Several factors have depressed global trade in recent months. First, the emergence of the new coronavirus in China caused factories there to shut down, disrupting supply chains world-wide. Then the virus spread around the world, prompting many businesses to close operations, which caused job losses, and many governments to issue stay-at-home orders, which held down consumer spending. The lockdowns have likely produced a global recession, further reducing demand.

The Tuesday report offered an early glimpse at the effect of those lockdowns on travel and trade. Travel into the U.S.—counted as an export in trade statistics—was down 45.3% in March from the previous month. Overall services exports fell 15.3% on the month to $59.6 billion, the lowest since December 2013.

The collapse in oil prices also contributed to slowing trade volumes in March. Imports of petroleum products were down 21.9% while exports fell 13.2%.

Exports of cars and car parts were down 17.9%, reflecting both closed factories in the U.S. and a drop in global demand. Imports were down 8.9% from the previous month.

The International Monetary Fund predicted last month that global trade would fall 11% this year. The World Trade Organization projects an even steeper decline of between 13% and 32%, affecting all global regions but particularly Asia and North America.

A decline of such magnitude would be steeper than during the global financial crisis of 2008-09, the WTO said. After that crisis, trade never returned to its previous level, the WTO said. The same could happen now if the coronavirus shock ends up being prolonged.

U.S. economic data released so far all suggest that trade flows will slow considerably in the months ahead.

The Commerce Department reported Thursday that consumer spending fell 7.5% in March, the sharpest one-month drop on record. On Friday, a gauge of manufacturing showed factory activity contracted in April at the sharpest pace since the last recession.

Overall economic output fell at a seasonally adjusted annual rate of 4.8% in the first quarter, the department said last week.

Karl Glassman, the chief executive officer of Leggett & Platt, Inc., which makes furniture parts, said Tuesday that the collapse in global demand had forced the company to temporarily lay off employees and cut costs.

“So much of the demand that we experience is based on consumer confidence, and we have a consumer that doesn’t know, frankly, what to think,” he said on an earnings call. “It always feels like we’re one day away from bad news.”

If U.S. exports continue to decline faster than imports, it would widen the trade deficit, which had been shrinking over the past year amid a slowing global economy and the Trump administration’s tariffs on China.

The two countries struck a Phase One trade agreement in January, which committed China to increase its purchase of U.S. goods by $77 billion in 2020 and by $123 billion in 2021.

At the time, analysts said it would be difficult for Chinese companies to boost imports to that extent. Now, the economic fallout of the pandemic makes it even less likely the Chinese private sector will meet those targets.

Over the first quarter of the year, exports to China are down 15.4% from the first quarter of 2019. Imports are down 28.4%.

Meeting the terms of the deal could now rely on the state’s willingness to step in and make the purchases instead of the private sector, said Mary Lovely, an economist at Syracuse University.

“There are going to be a lot of businesses in China that are not going to survive this,” she said, referring to the lockdowns associated with the coronavirus. “They’re definitely going to have trouble.”

Global trade will rebound once the pandemic is contained, Mr. Setser said, but it might not return to the same level as before. The shortages of medical supplies that the U.S. and other countries experienced due to the supply-chain shocks could prompt efforts to be more self-sufficient, he said. That could reduce some trade flows in the long run, he said.

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