The numbers: The trade deficit in goods rose 2% in January to a three-month high of $91.5 billion, reflecting high inflation as well as a steady U.S. appetite for new cars, food and consumer goods.
The trade gap in goods increased from $89.7 billion in the final month of 2022, the Census Bureau said.
Large deficits subtract from gross domestic product, the official scorecard for the economy. The trade gap in goods has tapered off since hitting a record $125.3 billion last spring, but it’s still historically high.
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An advanced estimate of wholesale inventories, meanwhile, showed a 0.4% decrease in January. Retail inventories rose 0.3% in the month, according to an early estimate.
Big picture: The trade deficit has set fresh records for three years in a row, but it’s on track to narrow for the first time since 2019.
Since the pandemic, the U.S. has recovered faster than the the economies of most other countries. That’s fueled a surge in spending on imports and a slower though still-strong increase in exports.
By and large, the trade gap usually doesn’t reveal much about the health of the economy in the short run. The U.S. has endured high deficits through expansions and recessions and they aren’t going away anytime soon.
Key details: Imports of goods rose 3.4% to $265.3 billion in January. Auto imports posted an unusually strong increase. Food imports also rose, largely due to higher prices.
Exports climbed 4.2% to $173.8 billion. The U.S. exported more food, autos and consumer goods, mirroring the changes in imports.
Looking ahead: “Inventory accumulation and the trade deficit are on course to be negative for real GDP growth in the first quarter after being big supports in the fourth quarter of last year,” said chief economist Bill Adams of Comerica. “But the economy’s trend looks to be holding up and probably improving in early 2023.”
Market reaction: The Dow Jones Industrial Average DJIA,
