The U.S. trade deficit in 2022 rose to an all-time high for the third year in a row, largely because of higher oil prices and Americans’ strong appetite for new cars, cell phones and other consumer goods.
The trade gap last year jumped 12.2% to $948.1 billion from $845.1 billion in the prior year. Just six years ago, the deficit was half the size.
The U.S. has run large trade deficits for years and it’s usually doesn’t have much impact on the economy’s performance. Yet some big ups and downs in the trade gap last year also produced large swings in gross domestic product.
In December, the trade deficit rose 10.5% to $67.4 billion.
Big picture: The U.S. trade deficit surged again in 2022 chiefly for three reasons: Rising inflation, a huge spurt in oil prices and strong demand for imported goods.
Americans were able to buy more imports because of a strong dollar that made foreign goods less expensive. The U.S. economy was also in better shape.
Other countries recovered more slowly than the U.S., and hammered by a strong dollar and rising inflation, they could not afford to buy as many American exports.
Economists predict the trade gap will narrow a bit in the years ahead, but they are likely to remain large and persistent because of fundamental changes in the U.S. and global economies that would be hard to undo.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open lower in Tuesday trades.