The US foreign trade deficit hit a record high in January

The US foreign trade deficit rose to a record high in January amid a surge in imports as companies struggle to replenish their depleted inventories.

The trade deficit widened 7.1 percent to a historic high of $107.6 billion last month

The Ministry of Commerce announced on Monday.

Photo: APU GOMES / AFP

Goods imports increased by 1.7%, mainly due to food and automobiles. The imports of industrial products, capital and consumer goods also showed significant growth. Meanwhile, export trade fell 1.8%.

Trade will hold back GDP growth for six straight quarters.

The recovery in imports in January largely reflects the replenishment of inventories. While wholesalers’ inventories increased by 0.8 percent, retailers’ inventories increased by 1.9 percent, which also contributed to the 2.4 percent increase in automobile inventories. Retail inventories excluding autos rose 1.7 percent after a 3.9 percent increase in December. Inventory investment increased a total of $171.2 billion in the fourth quarter. Economists see more room for growth, but believe it is still below pre-pandemic levels.

Inventory filling contributed 4.90 percentage points to the last quarter’s annual growth rate of 7 percent.

However, due to the record deficit, estimates for the first quarter of this year are much lower, ranging from 0.6 percent to 5.4 percent.

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