US Trade Deficit in Goods Surges to Record High as Imports Spike While Exports Sink

Container ships docked at the Port of Oakland in Oakland, Calif., on March 6, 2019. (Justin Sullivan/Getty Images)

The U.S. trade deficit in goods rose sharply in November to a record high, as imports of merchandise mushroomed while exports fell.

The trade deficit in goods—which is the difference between imports and exports of products—surged by a whopping 17.5 percent over the month in November, hitting an all-time high of $97.8 billion after October’s deficit of $83.2 billion, the Commerce Department said in a Dec. 29 statement (pdf). The previous record was set in September when the trade gap climbed to $97 billion.

Goods exports declined 2.1 percent over the month, or $3.3 billion, to $154.7 billion, while imports rose by 4.7 percent, or $11.3 billion, to $252.4 billion.

The figures put the United States on track for its largest-ever annual trade deficit in goods and services, which set a record in 2006.

Since trade deficits subtract from economic output in GDP calculations, the figures suggest a softer print is in store for U.S. economic growth numbers for the fourth quarter—and for the year as a whole.

“The deficit shattered expectations of $86 billion, and is a 17.5 percent higher than the prior month,” economist Peter Schiff said in a tweet. “This horrific data proves the U.S. economy is a complete disaster. It has never been weaker!”

The Commerce Department report also showed a rise in both wholesale and retail inventories last month, as businesses sought to bolster inventories in the face of strong consumer demand, boosted by federal stimulus and a rebound of economic activity from the pandemic recession.

The U.S. economy grew at a 2.3 percent annualized rate in the third quarter, sharply lower than the 6.7 percent pace of growth in the second quarter.

Economists are generally predicting a solid rebound in the final quarter of the year, as long as high inflation and a rise in COVID-19 cases don’t dampen economic activity.

“In less than a month’s time, the swift and dramatic emergence of the Omicron variant has created a higher level of risk and uncertainty for the economic recovery,” Bankrate senior economic analyst Mark Hamrick told The Epoch Times in an emailed statement.

Surging inflation, which has emerged as a key concern among U.S. consumers, has prompted the Federal Reserve to accelerate the pace of scaling back stimulus.

As 2021 draws to a close, the main U.S. stock indexes are on pace for their third straight year of strong annual returns, with historic levels of fiscal and monetary stimulus providing a tailwind to risk assets.

Overall, economists expect the U.S. economy to grow by around 5.5 percent for the entire year, which would be the best showing since 1984 and a sharp rebound from 2020, when the economy contracted by 3.4 percent.