The U.S. trade deficit swelled to a record high at the start of 2022, the latest sign that American demand for foreign-made goods has continued to sharply outpace shipments abroad.
The trade deficit in goods and services rose by $7.7 billion, or 9.4%, to $89.7 billion in January, according to data released by the Commerce Department on Tuesday. Analysts surveyed by Bloomberg had forecast a trade deficit of $87.3 billion.
The Commerce Department offered a fresh snapshot of a global supply chain that has been roiled by shortages and clogged ports throughout the coronavirus pandemic, which led to a surge in demand for goods among Americans who were cooped up at home.
“The U.S. is kind of the epicenter of this problem because we’re the country with the hottest demand for goods,” said Ethan Harris, the head of global economics research at Bank of America Securities.
The Commerce Department data was collected weeks ahead of the Russian invasion of Ukraine, which is expected to add to trade upheaval in the coming months. On Tuesday, President Biden announced a U.S. ban on imports of Russian crude oil, liquefied natural gas and other energy imports.
The value of imported goods rose 1.2% to $314.1 billion in January as Americans splurged on foreign vehicles and food, the Commerce Department data showed. U.S. businesses sold fewer pharmaceuticals and other consumer products to other nations, dragging down the value of exported goods by 1.7% to $224.4 billion.
High energy prices were partly behind the large headline trade deficit. The figures were not adjusted for inflation, which has soared in the U.S. and other major economies in recent months.
The data reflected resilience in the economy even as the pandemic dragged on and supply chains grew increasingly tangled, said Mary Lovely, an economist at the Peterson Institute for International Economics.
“Overall, despite the ongoing logistics crunch, global supply chains delivered to Americans the goods and services needed to support continuing U.S. economic expansion,” Lovely said.
As the rapid spread of the Omicron variant curtailed travel in January, the value of U.S. services exports fell 2%, or $1.6 billion, to $68.5 billion. But the availability of Covid-19 vaccine and booster shots could help travel return to pre-pandemic levels in 2022, according to the World Travel & Tourism Council, a trade group.
The U.S. relies on Canada, Mexico and other nations for a majority of its energy needs, with Russia accounting for about 8% of total oil and refined products imports in 2021. But fallout from the Russian ban could weigh on the U.S. economy as global energy prices climb and supply chains are rerouted.
“It’s becoming increasingly clear that trade could be a bigger drag on first-quarter GDP growth,” Moody’s Analytics economist Ryan Sweet said, referring to gross domestic product.