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Monday, May 23, 2022
HomeNewsEconomyU.S. Trade Deficit Widens More Than Expected In December, Exports Fall

U.S. Trade Deficit Widens More Than Expected In December, Exports Fall

CREDIT: Reuters

The U.S. trade deficit widened more than expected in December as exports fell, which also suggests fourth-quarter growth estimates will be scaled back.

The Commerce Department said on Thursday the U.S. trade deficit increased 12 percent to $38.7 billion. November’s shortfall on the trade balance was revised to $34.6 billion from the previously reported $34.3 billion.

Economists polled by Reuters had forecast the trade deficit widening to $36.0 billion in December. In 2013, the trade deficit was $471.5 billion in total, which was actually the smallest U.S. trade deficit since 2009.

When adjusted for inflation, the trade gap rose to $49.5 billion in December from $45.0 billion in the month of November.

Because the import-export calculation factors into gross domestic product, GDP growth will likely be trimmed from previous estimates, again, suggesting another year where the once-thought recovering U.S. economy loses steam. Last week, in the government’s advance fourth-quarter GDP estimate cited trade as one of the key contributors to the economy’s 3.2 percent annual growth pace during the period.

Trade added 1.33 percentage points to fourth-quarter GDP growth as exports expanded at their quickest pace in three years and imports slowed. But it appears that will not be sustained.

Aside from economic problems on the domestic front, including the growing concerns and negative impacts of ObamaCare, lowing growth in markets in China have contributed to the stall.

Strengthening domestic consumer demand has the potential to increase more imports, which will lead to some slowing in economic growth in the first quarter.

In December, exports dropped 1.8 percent to $191.3 billion, while petroleum exports hit a record high in the month of December, despite headwinds from anti-petro policy from the administration.

Imports ticked up 0.3 percent to $230.0 billion in December, while imports of consumer goods hit a record high. However, the potential impact was limited by a drop in the average price of imported crude oil, which hit its lowest level since February 2011.

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