image of President Joe Biden, American flag, and economic icons

Yes, the U.S. economy is doing great!

Inflation still high, wage growth sagging, and a country that was once called the Land of Opportunity has diminished to a country in which just 11 percent of its Gross Domestic Product comes from goods they manufacture. 

Buying much more than what they are selling, the U.S. recorded a 2022 all-time-high trade deficit of $948.1 billion.

Imports increased 1.3 percent in December from November as demand for cell phones, cars, and other goods ticked up. Imports of services grew also. 

At the same time, exports of industrial equipment, consumer products, and other items edged down 0.9 percent compared to November.

December’s trade hole was $67.4 billion against November’s $61 billion.

The pace of imports slowed during the year’s final two quarters and exports in the fourth, the U.S. commerce department said.

Exports of U.S. oil, natural gas, and refined products leaped in the wake of Western sanctions on Russian petroleum.

American consumers also shifted their spending habits, buying less furniture and home exercise equipment and spending more on services, such as dining out and traveling abroad on the dollar’s strength.

Imports have been gradually declining since March 2022, The Wall Street Journal said.

China, which thrived during the COVID War as manufacturer to the world, shipped 8.7 percent less abroad in November and 9.9 percent less in December, the country’s statistics agency reported.

The value of Germany’s imports slid 6.1 percent in December from November; factory output shrank 6.3 percent in the same month.

France scaled back imports by 1.9 percent. Its factories delivered 0.3 percent less.

“Supply and demand are rebalancing after a massive shock” of inflation, suddenly higher interest rates, and other post-COVID effects, Ernst & Young’s chief economist Gregory Daco told the WSJ. 

Business investment and consumer spending are contracting, he noted, which is likely to reduce U.S. demand for imports.

Japan shipped 11.5 percent more goods overseas in December, year over year, with demand rising as the yen’s value sank, making Japanese products cheaper abroad.

That figure still was barely half of November’s 20-percent jump and a third of the almost 30-percent annual gain booked in September.

TREND FORECAST: Déjà vu all over again.

We noted record U.S. trade deficits in “U.S. Loses Trade War: February Trade Deficit Near Record” (12 Apr 2022) and “U.S. Trade Deficit Sets Another Record” (10 May 2022).

As we said in our April article, the U.S. trade deficit will continue at or near a record clip not only while the Ukraine war remains unsettled, but long after.

As we noted in “Trade Deficit USA: “We’re No. 1!” (11 Jan 2022), until America becomes more of a self-sustaining economy and brings more manufacturing back home, the trade deficit will continue to increase as long as Americans insist on buying the newest smartphone, four televisions in their homes, and a new wardrobe every season.

That process is underway: the U.S. has added more than 700,000 manufacturing jobs since 2020. However, consumers have continued to spend, cleaning out their savings accounts and piling up debt to keep spending, now on services instead of stuff (“U.S. Consumers: Buy More, Save Less,” 6 Dec 2022).

However, consumers have been spending less through the last half of 2022, in part because their savings accounts have collectively shrunk by more than two-thirds and also because shoppers are maxing out their credit cards (“Credit Card Debt Nears $1 Trillion, Sets Record,” 7 Feb 2023).

Consumers’ spending supports some 70 percent of the U.S. economy. With those shoppers running out of the means to keep buying, and as prices keep rising… the economy will drift closer to recession as inflation rolls on.

Skip to content