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The trade deficit widened in January as imports rose more strongly than exports. The U.S. trade deficit in goods and services rose to a seasonally adjusted $68.3 billion in January, from $67.2 billion in December. The trade gap peaked in March of last year and then narrowed over the course of 2022 as consumers spent more on services and experiences, at the expense of goods, dampening demand for imports. January’s gain is a reversal of that trend, but it is unlikely to last as consumer demand continues its shift from goods to services, and stockpiling by businesses slows.
Exports increased in January for the first time in five months. Total exports rose 3.4%, boosted by a big rise in consumer goods, autos, aircraft and nonmonetary gold exports. On the imports side, the 3% increase can be traced to a rise in inbound shipments of consumer goods, capital goods and autos. Services exports fell because of less foreign travel to the United States, while services imports rose slightly.
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International trade flows remain under pressure. Lower global growth will likely continue to weigh on demand for U.S. exports. Similarly, a gradual slowdown in capital spending by U.S. companies will crimp imports from the rest of the world.
Despite January’s widening trade deficit, net exports are poised to make a positive contribution to GDP in the first quarter. That said, the outlook for exports gets murkier for the rest of the year as economic uncertainty grows.
Source: Department of Commerce, Trade Data (opens in new tab)
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