The U.S. trade deficit mushroomed to a record in November and will likely continue for the duration of the coronavirus pandemic.
The same day the Commerce Department released the dismal trade deficit report, President Joe Biden claimed he had the “strongest first-year economic track record of any president in the last 50 years.”
“We’re ending 2021 with what one analyst described as the strongest first-year economic track record of any president in the last 50 years. Let’s keep the progress going,” the president tweeted on Wednesday.
According to Reuters, the goods trade deficit widened last month by 17.5% to $97.8 billion from $83.2 billion in October, Census Bureau data showed. That exceeds the previous record deficit set in September of $97 billion and may damp optimism that trade might finally add to U.S. economic growth this quarter for the first time in more than a year.
Imports rose by 4.7% with industrial supplies leading the way with an increase of $5.7 billion to $63.2 billion, followed by consumer goods rising by $2.9 billion to just shy of $67 billion as retailers rushed to fill store shelves ahead of Christmas. Both were record highs.
Goods exports, meanwhile, declined 2.1%, with weakness across the board outside of a 4.3% increase in food exports. The drop was led by declines of $1.4 billion in industrial supplies and $1.3 billion in capital goods.
Economists agree that the trade gap will continue throughtout the pandemic and was likely spurred by the omicron variant, with Nancy Vanden Houten, lead economist at Oxford Economic, warning that it “may further ignite demand for imported goods if services activity is restricted.”
“Looking ahead, we expect the trade deficit to remain historically elevated until pandemic worries ease,” asserted Houten.
According to Market Watch, the U.S. “is poised to surpass a record set in 2006 and incur its biggest international trade deficit ever.” Economists voiced their discontent with the bleak situation on Twitter, noting the trade deficit will hurt GDP growth.
