© Bloomberg. The silhouette of cranes are seen unloading container ships at the Port of Los Angeles in San Pedro, California.
(Bloomberg) — The US trade deficit widened to a record last year on a surge in imports as American companies scrambled early on to ensure they had enough merchandise on hand to meet demand.
The annual shortfall in goods and services increased 12.2% to $948 billion, Commerce Department data showed Tuesday. The December gap widened to $67.4 billion from the prior month. The figures aren’t adjusted for prices.
A record value of imports in 2022 reflects in part a push by retailers to replenish inventories well ahead of peak selling periods and avoid a repeat of shortages and supply-chain delays that clogged West Coast ports in 2021. A robust job market and pent-up savings from government stimulus programs have helped to keep consumer spending resilient.
The value of imports last year climbed 16.3% from 2021 to nearly $4 trillion, while exports of goods and services rose 17.7% to $3 trillion.
This year, however, global trade is expected to decelerate after central banks aggressively raised interest rates to combat an inflation surge owed in part to strong demand. The International Monetary Fund sees world trade expanding in 2023 at the slowest pace since 2009, excluding the immediate onset of the pandemic. It expects trade to pick up again next year.
“Overall, trade flows have slowed recently on a shift in demand for services from goods and weaker global growth,” Rubeela Farooqi, chief US economist at High Frequency Economics, said in a note. “But better growth prospects in the US and abroad could provide support over coming months.”
Still, US recession risks have climbed amid tighter policy, including increased odds that household spending will cool. A Gallup poll released Monday showed Americans are sour on the economy’s prospects, with about four in 10 expecting unemployment to rise.
While US companies and consumers benefited from a strong dollar through much of 2022, which makes foreign-made goods more competitive, it has weakened notably over the past three months.
The report showed industrial supplies such as oil topped the list of imports and exports for the year amid a surge in energy prices, followed by capital goods and consumer merchandise.
The annual goods shortfall with China widened 8.3% to a four-year high of $382.9 billion, while the deficit with the European Union shrank to just under $204 billion.
Read more: US-China Trade Climbs to Record in 2022 Despite Efforts to Split
- In December, the value of imports increased to $317.6 billion, while exports dropped to $250.2 billion
- The merchandise-trade deficit widened to $90.6 billion
- The nation’s surplus in services trade grew to $23.2 billion
- Travel exports — or spending by visitors to the US — rose to $13.3 billion
- Travel imports, a measure of Americans traveling abroad, fell to $10.7 billion
- On an inflation-adjusted basis, the December merchandise-trade deficit widened to $98.6 billion