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Saturday, December 2, 2023
HomeNewsEconomyU.S. Trade Deficit Widens in December, Expected to Weigh on 1Q GDP

U.S. Trade Deficit Widens in December, Expected to Weigh on 1Q GDP


Stacked shipping containers in U.S. trade port. (Photo: Reuters)

The Commerce Department reported on Friday that the U.S. trade deficit in December widened to $43.36 billion dollars, missing media forecasts. Economists polled by Reuters had forecast the trade deficit to widen to $43 billion. November’s deficit was revised lower to $42.23 billion.

The U.S. trade deficit slashed nearly half a percentage point from gross domestic product (GDP) in the fourth quarter, helping to hold down growth to an abysmal 0.7 percent annual rate. It is largely expected to remain a drag in the first quarter. But GDP was also hindered by reduced spending and increased savings by American households.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was weighed down on households cutting back on purchases of automobiles and spending on utilities. Further, a jump in savings to a three-year high suggested there is enough muscle to boost consumption in the months ahead.

The dollar increased 9.2% against the currencies of the United States’ main trading partners last year, which reduces demand for U.S.-made goods overseas. Lackluster global demand also has put a damper on exports.

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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