WASHINGTON—Continued strong consumer appetite for overseas goods pushed up the U.S. trade deficit in December, sending the full-year import-export gap to a record level in 2021.
The December deficit in trade of goods and services grew by 1.8% to a seasonally adjusted $80.7 billion, the Commerce Department said Tuesday, just less than the record deficit of $80.8 billion in September.
The full-year trade deficit for 2021 increased 27% to $859.1 billion, larger than the previous record of $763.53 billion in 2006. Annual trade balance records date to 1960.
The sharp increase in the trade deficit comes as the U.S. economy continues to recover strongly from the pandemic-induced slump during 2020. American consumers have spent heavily on imported goods such as computers, game machines and furniture, flush with stimulus money while less willing to splurge on travels and dining out due to health concerns. Robust demand for capital goods from businesses, as well as higher prices of energy and food items, have also added to U.S. import bills.
The International Monetary Fund estimates the U.S. economy grew by 5.6% in 2021, faster than most advanced economies whose average growth rate was 5%.
In December, imports rose 1.6% to $308.9 billion, growing more quickly than exports, which expanded by 1.5% to $228.1 billion, the Commerce Department said. Imports were bolstered by strong consumer demand for cellphones, toys and automobiles, while the growth in exports were supported by pharmaceutical preparations, auto and auto parts and nonmonetary gold.
The increases in December exports and imports suggest global supply chain problems are easing, said
senior U.S. economist for Capital Economics, a research firm. “Trade in both directions appears to have benefited from easing congestion at U.S. ports towards the end of last year,” he wrote in a research note Tuesday. He noted that the widening deficit will continue to push down the overall economic growth rate during the first quarter of this year.
Trade deficit with China grew 14.5% for the full year to $355.3 billion, as U.S. demand for Chinese goods surged amid the post-pandemic economic recovery. The level was still well below the record trade deficit of $418.2 billion the U.S. set with China in 2018.
A trade pact with China implemented by former President
to reduce the bilateral deficit with Chinese purchase commitments for U.S. goods expired on Dec. 31. Economists say China had fallen sharply behind the goals, creating pressure for the Biden administration to hold Beijing accountable for falling short.
deputy U.S. Trade Representative, said the U.S. is “actively engaged with China” to address bilateral trade issues. “It’s really clear that the Chinese have not lived up to their Phase One commitment,” she said last week during a panel discussion, referring to the bilateral agreement. “That’s something we’re trying to address.”
U.S. officials haven’t said what measures they will take to respond to China’s failure to meet the purchase commitments.
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