“When we look at the trade sector, it contributed significantly to the increase in January and February output,” said Robert Frick, corporate economist with Navy Federal Credit Union. “Business investment has increased significantly in the past year, which has supported the manufacturing expansion.”
Frick said a lot of the contraction and expansion could be attributed to business confidence. “It’s a very cyclical business, and it’s not a big shock and not a shock that shocks the public, so it doesn’t create fast changes in stocks. It can be built up and held for quite some time.”
The USITC said the government last month imported more goods than it could launch domestically. The USITC produces several reports on trade, including its official trade balance each month.
“The economy had an annual growth rate of 2.7 percent in the first three months,” said USITC Commissioner Rhonda Schmidtlein. “Year-to-date, net exports contributed 1.2 percentage points to real GDP growth.”
The Federal Reserve’s most recent Beige Book report, which is a report that looks at the activity in 12 of Fed’s districts around the country and a summary of each district’s economy, said that retailers across the country reported an increase in holiday sales compared with the same time last year.
USITC officials said total exports increased by 0.5 percent month-over-month, but the trade deficit decreased 1.3 percent because imports fell 0.4 percent month-over-month.
The Biden administration has often criticized China for its trade practices, but officials said that it did not significantly impact the overall economy.
“An increase in imports versus exports would impact overall growth,” said Schmidtlein. “If we were to continue our growth trend, we would see a small deviation from this trend over time.”
The Biden administration in 2021 imposed tariffs on Beijing, and Beijing retaliated against U.S. products, including soybeans and pork. The Peterson Institute estimated that a 10 percent tariff on all other imports from China would reduce U.S. GDP by about $75 billion, or about 0.4 percent, in 2022 and 2023.
The rise in imports comes amidst an expansion in the manufacturing sector, which has gained steam since late 2020, said USITC officials.
“Manufacturing growth, when you look at GDP, it’s about 2 percent of GDP,” said Frick. “Not only is that significant for overall output but also important for employment.”