America’s international trade deficit is set to hit an all-time high for the third year in a row in 2022, largely due to higher oil prices and Americans’ strong appetite for new cars, cell phones and other consumer goods.
The trade gap widened by 12.2% to $948.1 billion from $845.1 billion in the previous year. The deficit was half the size just six years ago.
The US has run large trade deficits for years and this usually does not have much effect on the performance of the economy. Yet last year some large fluctuations in the trade gap also produced large fluctuations in GDP.
The trade deficit widened by 10.5% to $67.4 billion in December.
Both imports and exports softened at the end of the year in a sign of economic weakness at home and abroad.
US imports rose 1.3% to $317.6 billion in December.
Exports fell 0.9% to $250.2 billion, reflecting lower petroleum prices. The price of oil fell sharply by the end of 2022.
Main details: For the full year, imports rose 16% to $3.96 trillion.
Exports to grow by 17.7% to a record $3 trillion in 2022.
The deficit widens in 2022 with China and Mexico, America’s two largest trading partners
America. The gap with China widened from $353.5 billion to a record $382.9 billion, despite rising political tensions between the two countries and trade disruptions linked to the pandemic.
However, the biggest increase in losses last year was with Europe.
big picture: The US trade deficit widened again in 2022 mainly for three reasons: rising inflation, a jump in oil prices and strong demand for imported goods.
Because of the stronger dollar, Americans were able to import more, making foreign goods less expensive. The US economy was also in better shape.
The economies of other countries recovered more slowly than the US, and hit by a stronger dollar and rising inflation, they could not buy as many US exports.
Economists expect the trade gap to narrow slightly in the coming years, but they are likely to remain large and persistent due to fundamental changes in the US and global economies that will be difficult to undo.
“The data still suggest that domestic and external demand remains weak,” Andrew Hunter, senior US economist at Capital Economics, said in a note to clients.
Market Feedback: Dow Jones Industrial Average DJIA and the S&P 500 spx were set to open lower in Tuesday’s trading.
Credit: www.marketwatch.com /