U.S. Trade Deficit Hits New Record, Lowering Expectations for Q1 GDP
March 9, 2022
The U.S. trade deficit hit a record high in January as imports of vehicles and energy supplies increased and exports fell.
The gap between imports and exports grew by 9.4% from the month prior, climbing to $89.7 billion in January, according to the Commerce Department.
Imports increased 1.2% in January, led by increased shipments of motor vehicles and industrial supplies, including crude oil and natural gas. The rise in imports reflected continued demand for foreign-made goods as businesses restock depleted inventories, albeit at a slower pace. The increase in wholesale inventories in January was the smallest in six months, diminished by a decline in motor vehicle stocks. Exports, meanwhile, fell 1.7%. Exports for goods were down, particularly pharmaceuticals, which analysts attribute to the slowing pace of vaccine demand. Exports of services like travel and transportation also declined.
The report supports the view that economic growth in the first quarter of the year is likely to slow significantly from the last quarter of 2021. Following the release of the report, Goldman Sachs lowered their first-quarter GDP forecast from 1.5% to 1.0%.