U.S. Trade Deficit Nears Six-Year Highs

US trade deficit

The U.S. trade deficit increased more than expected in November with the imports of goods reaching a record high amid strong domestic demand. On Friday, the Commerce Department stated that the trade gap grew to 3.2 percent to $50.5 billion. This was the highest level seen since January 2012 and followed an increase revised $48.9 billion deficit in October.

In a survey, economists had predicted that the trade deficit would reach $49.5 billion in November following October’s $48.7 billion deficit. A portion of the increase of the deficit in November mirrored price increases. After adjusting for inflation, the trade deficit increased to $66.7 billion in November from $65.6 billion the previous month.

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The so-called real trade deficit for October and November higher than the third-quarter average of $62.0 billion. This could mean that trade will most likely subtract from gross domestic product for the third quarter. The long-lasting trade deficit has acquired the attention of President Donald Trump, who attributes the loss of manufacturing jobs and slow economic growth to it.

In December, the government reported for the third quarter that trade contributed 0.36 percentage point to the economy’s 3.2 percent annualized growth pace. The Trump administration argues that a smaller trade deficit, along with large tax cuts, would boost and sustain an annual economic growth of 3 percent.

In November, the imports of goods reached a record high of $204.0 billion and capital goods imports were the highest on record. Imports of consumer goods hit their highest level since the first quarter of 2015.


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Exports of goods grew by 2.3 percent to $200.2 billion for November, a new record high. There were robust increases in exports of industrial supplies, petroleum as well as capital goods.

In general, the exports of goods are being propped up by the recent dollar depreciation as well as a strengthening global economy. This is reinforcing the manufacturing sector. Exports to China dropped 1.9 percent. The politically delicate U.S.-China trade deficit increased 0.6 percent to $35.4 billion in November.


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