The U.S. trade deficit soared to a new record high in January as the U.S. imported more oil and autos and inflation pushed up the price of goods while exports declined.
The trade deficit climbed 9.4 percent in January to $89.7 billion, breaking the $81.9 billion record set just a month earlier.
Last year, saw the trade deficit gap grow to record size as the U.S. economy recovered faster than most other countries and U.S. consumers snapped up goods. As a result, a significant portion of the stimulus income that drove deficits to record highs leaked out of the U.S. economy, becoming income for foreign manufacturers.
A growing trade deficit subtracts from gross domestic product. Economists will likely bring down their estimates of first-quarter growth due to the record high deficit.
Analysts had expected a deficit of $86 billion.
Imports climbed 1.2 percent in January to a record $314.1 billion, topping $300 for the third consecutive month. This is the first time imports have been that high for three straight months.
The U.S. imported more autos, oil, natural gas, industrial supplies, food, and capital goods. The prices of all these have risen sharply due to inflation, which pushes up the dollar figures of imports.
Exports slipped 1.7 percent to $224.4 billion, largely due to a decline in pharmaceutical shipments. That likely reflects a decline in orders for vaccines. Travel and transportation services exports fell as the omicron variant-driven spike in infections depressed tourism.
U.S. manufacturers have had trouble keeping up with demand due to shortages of materials and parts. What’s more, inflation has pushed up prices for U.S. goods, making them less competitive internationally.