The numbers: The U.S. trade deficit in goods topped $1 trillion in 2021 for the first time ever, as an economic recovery enabled Americans to snap up a record amount of imports such as toys, cell phones and appliances.
For all of 2021, the trade gap in goods rose to $1.08 trillion from $893.5 billion in the prior year. The deficit in 2020 had also been a record high.
The deficit in goods increased 3% in December to $101 billion from $98 billion, according to an advanced government estimate. It was the biggest monthly increase on record.
Big picture: The speedy rebound in the U.S. economy compared to most other countries — fueled by massive government stimulus — helps explain the record trade deficit. Americans could afford to buy more foreign-made goods, and they did.
Demand for U.S. exports was slower to bounce back because other countries lagged behind in their economic recoveries.
The deficit is expected to subside once other countries catch up, but the U.S. has run large trade gaps for years and there doesn’t appear to be any end in sight.
Key details: U.S. imports advanced 2% in December to $258.2 billion.
Exports edged up 1.4% to $157.3 billion.
The overall trade deficit in 2021 is expected to fall short of $1 trillion since the U..S. regularly runs a surplus in services such as tourism and travel. The total gap is likely to be just under $800 billion.
More details will be released next week when the government publishes the full December report on the U.S. trade balance.
Also in the trade report, the government said advanced retail inventories jumped 4.4% in December. Wholesale inventories increased 2.1%, preliminary data show.
Businesses have been trying to boost production to keep up with strong customer demand, but they’ve been dogged by persistent labor and supply shortages.
Looking ahead: “The omicron variant threatens to fuel an even wider deficit in as virus concerns weigh on global growth and tourism, putting downward pressure on US exports, while domestic goods demand stays robust,” said U.S. economist Mahir Rasheed of Oxford Economics.