The US trade gap widened to a new record in 2022, but expanded less than expected in December, government data showed on Tuesday February 7 that the year was close to being closed due to strong spending and robust imports.
The Commerce Department said the trade gap grew from US $103.0 billion to US $948.1 billion last year, ranging from crude oil to consumer items like pharmaceuticals and household products.
This is the biggest deficit in government data dating back to 1960.
The 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.
The US imports rose by US $4.2 billion from November to December, hitting US $317.6bn on spending on consumer goods such as cell phones and other household goods as well as automotive vehicles.
Exports fell from US $2.2 billion to US $250.2 billion in December, dragged down 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.
The deficit with China increased by US $29.4 billion to US $382.9 billion in 2022, due to higher imports.
In a recent note, Ian Shepherdson, chief economist of Pantheon Macroeconomics, said net trade has been a major factor in the headline GDP growth over the past year.
He said that it fell in the first quarter of 2022 as an inventory-rebuilding frenzy by wholesalers and retailers led to a surge in imports.
Trade provided a boost in the subsequent quarters as the surge unwounded.
He said that large swings in 2023 are unlikely.
Rubeela Farooqi, chief US economist at High Frequency Economics, said trade flows have slowed recently due to a shift in demand for services from goods and weaker global growth. She said that there could be more support over the coming months if there are better growth prospects in the US and abroad.