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Just because yesterday’s first RealityChek post on the U.S. government’s latest official trade data focused on all the monthly records set by the December monthly results doesn’t mean that the annual figures for 2021 were lacking in all-time highs and lows – and for the same CCP Virus-related reasons.

So let’s get to them – and conclude with some needed context. For as known by RealityChek readers, isolated data don’t tell all the story, or even the most important part of the story. And the big takeaway from examining the context is that in a surprising number of ways, 2021 looked pretty ordinary trade-wise.   

For now, though, let’s start by noting that last year’s combined goods and services trade deficit hit a record $859.13 billion – the second straight all-time high, and a 26.96 percent jump from 2020’s $676.68 billion.

But don’t think that annual increase was in a class by itself. Far from it. Here are the first bits of context: As recently as 1998 and 1999, the total trade gap widened by 53.45 percent and 53.97 percent, respectively. In 1984 and 1993, the figures were 88.82 percent and 79.31 percent, respectively.

Further, in 1983, the trade shortfall more than doubled (surging by 139.14 percent), and in1972 and 1977, it more than quadrupled. In addition, three times during the 1970s, the trade balance switched from surplus to deficit, and in the 1960s, major drops in the surplus occurred.

Even so, it’s crucial to remember that during these periods, oil and its price changes were major chunks of U.S. trade flows and deficits. Big rises in the dollar’s value have also often contributed substantially to big past increases in the trade shortfall. And never forget that the absolute numbers were much smaller then, so large percentage changes were much easier to generate.

Still, the trade deficit’s growth last year ranks as pretty impressive. Ditto for the fact that unlike was the case for decades, it’s largely unrelated to oil (although the small $13.98 billion surplus in this sector turned into an $8.44 billion deficit).

Speaking of oil’s role in U.S. trade, as known by RealityChek regulars, it matters in part because it’s rarely the subject of trade deals and other trade policy decisions. In fact, stripping out from U.S. trade flows oil and services (where liberalization efforts have made relatively little progress) yields the statistics for non-oil goods – the trade flows that are heavily influenced by U.S. trade policy.

And 2021 represented the seventh straight year of record deficits in this “Made in Washington” trade account. Moreover, the $1.06993 trillion level topped 2020’s by 15.66 percent. This increase, though, impressive as it was, was well short of the biggest in history, too (in a series going back to 1992). That dubious distinction goes to 1993’s 76.63 percent, but as recently as 2015, the Made in Washington deficit was climbing at a 21.23 percent annual rate.

Last year’s goods trade gap of $1.09068 trillion was the second straight all-time high and an 18.29 percent widening from 2020’s $922.03 billion. Again, however, the all-time worst is orders of magnitude higher (227.86 percent in 1977), and all the aforementioned influences and qualifiers apply. But as recently as 2010 (another first year of recovery following a steep economic downturn), the goods deficit was up 27.27 percent on year.

The $231.55 billion surplus in U.S. services trade was no record, either, but it was the lowest annual total since 2012’s $215.21 billion, reflecting how hard this sector has been hammered by the pandemic and the economic policy and behavior curbs it’s spawned.

In terms of trade flows closely followed by RealityChek, the huge and chronic deficit in manufacturing soared by 19.23 percent year-on-year in 2021, from $1.11527 trillion to $1.32977 trillion. The shortfall was an eleventh straight annual record and the fourth consecutive year it topped the trillion-dollar mark. The annual increase was high by recent standards, but smaller than 2010’s 27.90 percent.

The Advanced Technology Products (ATP) category saw its fifth straight record annual deficit, and the $197.16 billion total was 3.13 percent above 2020’s $191.18 billion.

The also huge and chronic U.S. goods trade deficit with China was up 14.52 percent on year in 2021, from $310.26 billion to $355.30 billion. Not only was this figure well below the record $418.23 billion set in 2018, but the annual increase was slower than in the non-oil goods deficit – which indicates that the sweeping and often steep Trump administration tariffs on imports from the People’s Republic have been having their intended effects.

Total U.S. exports grew by a healthy 18.46 percent on year in 2021, from $2.13444 trillion to $2.52854 trillion. But they’re still below the all-time high of $2.53864 trillion, set in 2018.

Goods exports were up on year in 2021, too – by 23.32 percent, from $1.42880 trillion to $1.76197 trillion, but also remain lower than their peak – the $1.67691 trillion also achieved in 2018.

The hard hit services industries managed an 8.63 percent annual improvement in exports in 2021, from $705.64 billion to $766.50 billion. But they still remain 12.52 percent shy of their record of $876.30 billion, set in 2019.

Non-oil goods exports rose to an all-time annual high of $1.55849 trillion in 2021 – a figure 20.42 percent higher than 2020’s $1.29421 trillion. But they’re also short of a 2018 record ($1.49101 trillion).

Domestic manufacturing boosted its exports even faster last year – by 18.91 percent, from $953.02 billion to $1.13325 trillion. But it’s all-time high of $1.19227 trillion dates from way back in 2014!

Despite ATP overseas sales advancing by a nearly as strong 18.57 percent, in 2021, from $300.78 billion to $356.62 billion, they’re still below their record, too – 2018’s $368.63 billion.

U.S. goods exports to China were 21.35 percent higher in 2021 than in 2020 – rising from $124.49 billion to $151.07 billion. The growth rate of 21.35 percent was slightly higher than that for global proxy non-oil goods – a likely result of former President Trump’s 2020 Phase One trade deal.

Arguably more impressive, it was the fastest such growth since the 32.25 percent hit in 2010, when the United States was recovering from the Great Recession. (The best performance in U.S. goods exports to China came way back in 1988 – 43.59 percent – when the absolute numbers of course were tiny.)

The nation’s import figures continued the string of trade flow records. Combined goods and services imports of $3.38767 trillion were an all-time high, and grew 20.51 percent over 2020’s $2.81113 trillion. They also blew past the previous peak of $3.11959 trillion, set in 2018.

Stronger growth (21.35 percent) was registered by goods imports, which expanded from $2.53083 trillion to $2.82565 trillion. The previous high – which also came in 2018 – was $2.55566 trillion.

In services, annual import growth was just 16.23 percent in 2021 – rising from $460.30 billion to $535.02 billion. The yearly record for these purchases was 2019’s $591.12 billion,

The record story remained intact in non-oil goods imports. These increased from $2.21934 trillion to $2.62842 trillion – an 18.43 percent growth rate. The previous all-time high for these imports was 2018’s $2.31086 trillion.

Imports in manufacturing reached their own record in 2021 – $2.64303 trillion. That surpassed 2018’s previous all-time high of $2.17711 trillion and topped 2020’s $2.06829 trillion level by 19.09 percent.

For ATP, annual imports advanced by 12.52 percent in 2021 – from $491.96 billion in 2020 to $553.78 billion. The previous record was just $496.06 billion, also set in 2018.

And Americans bought $506.37 billion worth of goods from China in 2021. That topped 2020’s $434.75 billion total by 16.47 percent, but was considerably short of 2018’s record $538.51 billion and the growth rate was slower than that for global proxy non-oil goods – likely another effect of the Trump tariffs that have been largely maintained by President Biden.

But true to the truth that context is crucial, let’s return to that methodology. The main context for last year’s record trade deficits is their size compared with that of the entire economy. And here, in particular, 2021 doesn’t look like such a trade disaster.

Specifically, the combined goods and services deficit as a share of total gross domestic product (GDP) in pre-inflation dollars (to produce apples-to-apples results) came to 3.74 percent in 2021. That’s a big jump from 2020’s 3.24 percent. But it’s not only lower than the record 5.53 percent of 2006, but than the 5.50 percent of 2005, the five percent of 2004, the 4.91 percent of 2007, the 4.82 percent of 2008, and the 3.85 percent of 2002.

Nor is the 2021 growth rate of 15.43 percent in this share unheard of – or even close. For example, during the first calendar year of the economy’s recovery from the Great Recession, in 2010, it was up by 22.34 percent. And between 1999 and 2000, it soared by 35.71 percent. (The growth rate was twenty percent in also pandemic distorted 2020.)

The same goes for the goods deficit as a share of GDP. Last year it was 4.74 percent – a 7.48 percent increase from 2020’s 4.41 percent. But the 4.74 percent figure has been exceeded no fewer than six times going back to 1999 alone. And the growth rate has been topped by 2011’s 10.21 percent, 2010’s 22.44 percent, 2005’s 10.29 percent, 2004’s 15.01 percent, 2003’s 8.74 percent, 2002’s 9.02 percent, and 2000’s 24.57 percent (the 21st century record), along with 9.43 percent in pandemic-distorted 2020.

The Made in Washington trade deficit as a share of GDP did hit a 21st century record in 2021 – 4.65 percent. And before 2020’s 4.43 percent, the next highest such figure was 2005’s 4.17 percent. But here, too, the 2021 growth rate in the deficit as a share of GDP of 4.97 percent is ordinary. Leaving aside 2020’s 13.30 percent, it’s been bested no fewer than nine times since 2000, including the record 18.84 percent in 2010.

As a result, it’s not entirely unreasonable to approach 2022 with some trade optimism. Big wild cards remain – mainly how the CCP Virus evolves, how effective the U.S. and global responses become, the future of those China tariffs, and Federal Reserve’s upcoming decisions on interest rates and bond-buying – which could greatly influence the economy’s growth rate.

But if there’s a case that even with all the virus-related distortion and massive government stimulus, the U.S. trade numbers were held in check last year, there’s one that even better results may soon start appearing.