U.S. Trade Deficit Hits New Low: A Boon for Economic Growth

The U.S. trade deficit decreased significantly in August as exports grew and imports decreased, marginally affecting economic growth in the third quarter. The trade gap reduced to $70.4 billion from $78.9 billion in July, according to the Commerce Department. Economic growth is projected to reach 3.2%.

The United States witnessed a notable decrease in its trade deficit in August, as the gap shrank by 10.8% to $70.4 billion from July's $78.9 billion, according to the Commerce Department. This adjustment came as a surprise, as economists had predicted a slightly larger deficit of $70.6 billion.

Increased exports and reduced imports are credited for this shift, suggesting a modest impact on economic growth for the third quarter. Analysts are optimistic, with growth estimates reaching as high as a 3.2% annualized rate, a slight increase from the 3.0% pace recorded in the April-June quarter.

Despite trade being a negative contributor to the GDP for two consecutive quarters, the current developments indicate a positive turn which could bolster the U.S. economy in the coming months.

(With inputs from agencies.)