The U.S. trade deficit surged to a record high in 2021 as imports increased sharply amid the restocking of shelves by businesses to meet robust domestic demand.
The sharp widening in the trade gap reported by the Commerce Department on Tuesday mostly reflected a shift in spending toward goods from services during the COVID-19 pandemic. With businesses eager to rebuild depleted inventories against the backdrop of stretched global supply chains, the deficit is unlikely to shrink much this year, cutting into economic growth.
“The need to replenish inventory in the United States will keep imports strong even as domestic demand transitions back to services,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. “Eventually as domestic demand begins to slow and the global recovery continues, we expect trade to become more of a neutral force on growth next year.”
The trade deficit increased 27.0% last year to an all-time high of $859.1 billion. It was at $676.7 billion in 2020.