The U.S. trade deficit soared to a record high in November as consumer demand for goods and the easing of supply chain bottlenecks caused imports to surge, according to the Commerce Department.
The goods deficit increased in November to $99 billion as consumers shopped for holiday gifts earlier than in previous years, the Commerce Department announced Thursday. Imports outweighed exports, bringing the U.S. trade deficit in goods and services in November to $80.2 billion.
“The trade deficit will likely stay high in December and January due to the backlog of ships waiting to unload at U.S. ports and headwinds to tourism from Omicron,” PNC Financial Services Group economist Bill Adams said, according to The Wall Street Journal.
Backlogs at U.S. ports softened during the fall, leading to increased imports while consumer demand remained strong entering the busy holiday season, the WSJ reported.
“It’s the ongoing strength of U.S. retail spending that’s one of the big drivers of this,” Andrew Hunter, senior U.S. economist at Capital Economics Ltd., told the WSJ, referring to strong consumer demand for goods made overseas.
Exports, like energy and agricultural commodities, have benefited from easing COVID-19 restrictions along with robust overseas demand, the WSJ reported.
Global trade has also had a strong recovery after plummeting during the height of pandemic restrictions. That said, roaring consumer demand coupled with transportation and delivery problems disrupted the flow of goods in recent months.
Some indicators nonetheless see supply chain difficulties easing in the coming months.
The Institute for Supply Management said in its December manufacturing report that the “supply-chain performance is moving toward a more appropriate balance with demand,” the WSJ reported.
Others see congested U.S. ports and the surging Omicron variant signaling significant headwinds for trade, the WSJ reported.
“Input-cost inflation is at a 10-year high and labor shortages and other issues are causing disruptions across our supply chain, from our suppliers to manufacturing to distribution,” General Mills Inc. chief executive Jeff Harmening said, according to the WSJ. “These disruptions are driving down service levels and driving up costs above and beyond inflation throughout the industry.”
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