The US trade gap widened to a record in 2022, though expanding less than expected in December, government data said Tuesday, capping off the year on robust imports and strong spending.
The overall trade gap grew $103.0 billion from 2021 to $948.1 billion last year, according to Commerce Department data, on a surge in goods imports ranging from crude oil to consumer items like pharmaceuticals and household products.
This marks the biggest deficit in government data dating back to 1960.
Analysts note that trade has been a swing factor in GDP growth over the last year, bogging it down in the early months of 2022 but providing a boost later on.
In December, the trade deficit expanded $6.4 billion to $67.4 billion, said the Commerce Department.
US imports rose $4.2 billion from November to December, hitting $317.6 billion on greater spending on consumer goods such as cell phones and other household goods as well as automotive vehicles.
Exports slipped $2.2 billion to $250.2 billion in December, dragged by a fall in goods exports such as industrial supplies and materials.
The latest figures come as households shift more spending to services instead of goods, with consumers grappling with persistently high inflation.
For all of 2022, the deficit with China widened by $29.4 billion to $382.9 billion in 2022, on higher imports.
“Net trade has been a significant swing factor in headline GDP growth over the past year,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics in a recent note.
“It depressed growth in the first quarter of 2022 as an inventory-rebuilding frenzy by wholesalers and retailers led to a surge in imports,” he said.
But trade provided a boost in the subsequent quarters as the surge unwound.
“Similarly large swings in 2023, however, are unlikely,” he said.
Rubeela Farooqi, chief US economist of High Frequency Economics added that trade flows have “slowed recently on a shift in demand for services from goods and weaker global growth.”
“But better growth prospects in the US and abroad could provide support over coming months,” she said.
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