Tags

, , , , , , ,

While I was on an odd (but not serious) medical hiatus from blogging this past week, the official U.S. trade data for December came out.  And since they contain the year-end results, I figured they’re amply worth reporting on even though they’re no longer breaking news.

But we’ll do it a little differently in this first cut at the numbers, which will focus on the broadest categories of U.S. trade flows and – at least as important – put them in context. That’s especially important because the raw statistics could easily prompt fears that the deficit is spinning out of control – including the gap with China – and from astronomical levels. Because it’s not – though the absolute numbers shouldn’t please anyone even given that CCP Virus pandemic-related distortions still permeate them. A particular reason for concern: The total deificit and most of the main sub-deficits have widened last year in the worst possible way, with exports down and imports up.

Let’s start with the combined goods and services trade shortfall, which grew by 12.19 percent on year in 2022 from $845.05 billion to $948.06 billion. (All these value figures are presented in pre-inflation dollars – the trade data most closely followed by students of the economy.) That’s the second straight new annual record, but the growth rate was down considerably from 2021’s whopping 29.21 percent and 2020’s 16.85 percent.

Moreover, at 3.72 percent, the overall trade deficit as a share of the nation’s economy (its gross domestic product, or GDP) inched up just from 3.62 percent in 2021. And the trade gap as a percentage of GDP was way off the record 5.53 percent, set in 2006.

The trade shortfall in goods hit a larger $1.19598 trillion – up from 2021’s $1.06835 trillion by 11.95 percent, and representing 4.68 percent of GDP. In this case, the growth rate was much lower than 2021’s 19.30 percent. And as a share of the economy, it was unchanged from the 2021 figure and a far cry from its peak of 6.06 percent, also set in 2006.

Services trade, long in surplus, saw its excess of exports over imports dip for the fourth straight year, although the 2022 decline of 0.63 percent (from $245.25 billion to $243.69 billion was much smaller than in 2021 (5.64 percent) or 2020 (12.66 percent).

As known by RealityChek readers, non-oil goods trade is the portion of U.S. trade flows that’s been most significantly affected by U.S. trade agreements and other policy decisions. This trade gap increased by 11.95 percent from 2021-2022, from $1.06835 trillion to $1.19598 trillion. That latter total was the eighth consecutive all-time high, but as a percentage of GDP, it climbed just from 4.58 percent to 4.70 percent between 2021 and 2022. The growth rate here was also considerably lower than in 2021 (16.58 percent) but slightly higher than 2020’s 10.24 percent.

In an important twist, however, this “Made in Washington” deficit’s share of the economy hit its eighth straight record, too – but mainly because the oil has become a much smaller proportion of the overall deficit and these non-oil goods a much bigger proportion.

Finally, goods trade with China is being kept under control as well – not insignificantly because of the steep, sweeping tariffs on goods imports from China imposed by former President Trump that have been substantially continued by President Biden.

As a percent of GDP, the goods trade gap with China of $382.92 billion came to 1.50 percent – a bit lower than 2021’s 1.52 percent, and well below the all-time high of 2.04 percent in 2018, the year the Trump tariffs began.

Also especially interesting: Since U.S. non-oil goods trade is a close proxy for U.S.-China goods trade, the continued increase in the former’s deficit as a share of GDP and the recent decrease in the latter also point to the effectivness of the Trump-Biden levies in curbing America’s economic engagement with an increasingly dangerous strategic adversary.

Tomorrow we’ll concentrate on .the 2022 annual results in manufacturing and high tech trade, as well as U.S. commerce with major trade partners

Advertisement