Through the first quarter of 2021, U.S. trade has been making a recovery after collapsing in 2020 due to the COVID-19 pandemic.
The WTO estimates that the volume of world merchandise trade is expected to increase by 8.0% in 2021 after falling 5.3% in 2020, continuing its rebound from the collapse that was lowest in the second quarter of 2020.
2021 U.S. Commodity Market Trends
Commodity exchanges moved 8.30% higher in Q1 of 2021. Commodity prices have recovered and are expected to remain close to current levels through the year. Most commodity prices have risen above pre-pandemic levels, driven by the upsurge in economic activity.
- Energy prices are expected to be more than ⅓ higher this year, with oil averaging at $56 per barrel.
- Metal prices are expected to increase by about 30 percent.
- Agricultural prices are forecast to increase by about 14 percent.
Consumers account for 68.2% of the U.S. economy. In the first quarter of 2021, they accelerated spending by 10.7%, compared with a 2.3% spending increase in the last quarter of 2020. Consumer spending has mainly focused on goods, which increased 23.6%. However, consumer spending on services also increased by 4.6%. Specifically, spending increased by 41.4% on durable goods such as appliances and other long-lasting commodity purchases.
Imports increased in Q1 of 2021, rising 5.7%, while exports declined by 1.1%. While trade flows continue to recover after being disrupted early in the pandemic, bottlenecks in the global supply chain are expected to remain a challenge.
U.S. Commodity Imports in March 2021
Imports of goods increased from $15.3 billion to $234.4 billion in March.
- Consumer goods increased by $4.5 billion.
- Other textile apparel and household goods increased by $1.2 billion.
- Furniture and household goods increased by $0.9 billion.
- Toys, games, and sporting goods increased by $0.9 billion.
- Industrial supplies and materials increased $3.7 billion.
- Capital goods increased by $3.3 billion.
- Automotive vehicles, parts, and engines increased $2.0 billion.
- Imports of services increased $1.1 billion to $40.0 billion in March.
U.S. Commodity Exports in March 2021
Exports of goods increased from $11.7 billion to $142.9 billion in March.
- Industrial supplies and materials increased $5.2 billion.
- Natural gas decreased by $1.7 billion.
- Capital goods increased by $2.9 billion.
- Consumer goods increased by $2.0 billion.
- Exports of services increased from $0.8 billion to $57.1 billion in March.
2021 U.S. Economic Trends
The U.S. economy is recovering faster than expected after contracting sharply in 2020. It grew 1.6% in the first quarter of 2021. The economy is still behind the activity level at the end of 2019, the pre-pandemic peak, by about 0.9%. However, we are likely several years away from fully recovering from the deep pandemic recession.
Economic growth in the U.S. is partly due to vaccines being rolled out across the U.S., which has boosted domestic demand and allowed businesses such as restaurants and bars to reopen. It has lifted confidence and helped consumer spending to hit a 14-month high in April.
Based on the robust economic momentum built up in the first quarter of 2021, we could be close to a fully functioning economy in the second quarter. However, the ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.