The U.S. trade in goods and services deficit hit a series of record highs in 2021, including $71.2 billion in May, which marked the second-highest on record after the $75.1 billion recorded in March, Panjiva's analysis of official data shows. An elevated deficit is expected during an economic boom.
The trade-in-goods balance increased 26.5% year over year and by 17.6% compared with May 2019 as a result of imports, which rose 41.0% year over year and by 5.0% versus 2019. The import expansion was largely due to a surge in consumer goods imports, as discussed in Panjiva's research of June 16, which has been an ongoing trend since October 2020.
The expansion in the overall trade deficit was also exacerbated by a reduced trade-in-services surplus after imports of services — ranging from financial and maintenance services to travel and media consumption — rose 27.1% year over year and by 9.1% compared with May 2019.
The Summer Olympic Games in Tokyo, scheduled to run from July 23 to Aug. 8, may provide an additional boost to services imports. Panjiva's analysis shows that in the prior three Summer Olympics, imports of "intellectual property" — which includes purchases of television rights — increased by an average of $820 million in August versus July, including $1.2 billion in August 2016 versus July 2016.
A similar phenomenon can be seen in the case of the Winter Olympic Games, with an average $712 million increase in February compared with January, including $783 million in February 2018 at the Pyeongchang Games versus January 2016. It should be noted that the figures only include media presentations of the games, not travel or merchandise, which may further add to imports.
It is not clear whether there is also a "fitness dividend" in terms of increased demand for sports equipment following the Olympics. Panjiva's data shows U.S. imports of sports, fitness and cycling equipment fell 8.0% year over year in the three months to November 2016 but increased in the same periods of 2012 and 2008.
There has already been a marked increase in U.S. seaborne imports of sports equipment in 2021, however, due to increased demand in the wake of the COVID-19 pandemic. These imports grew 65.0% year over year in the second quarter of 2021 after an expansion of 136% in the first quarter.
There has been a marked difference in performance in imports among different categories of importers. Among retailers, imports linked to Walmart Inc. jumped 324% while those associated with DICK'S Sporting Goods Inc. fell 29.5%. Similarly, in bicycles, imports linked to Giant Manufacturing Co. Ltd. rose 89.6% in the second quarter of 2021 while those linked to Kent International Inc. fell 6.5%, although the latter has been restructuring its supply chain. Companies importing home fitness equipment, meanwhile, have generally done better than average, shown by a 230.2% increase in imports associated with Nautilus Inc. while sports equipment makers such as Head B.V. saw more modest growth of 21.7%.
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.