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

By Tom Ozimek
Tom Ozimek
Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'
December 29, 2021 Updated: December 29, 2021

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.

Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'