U.S. Trade Deficit Widened in December
By JAVIER C. HERNANDEZ
NY Times
Rising demand for foreign goods in the United States caused the trade deficit to widen more than expected in December, the government said Wednesday, suggesting that American businesses and consumers were growing more confident about spending.
The gap between the value of imports and exports was $40.2 billion in December, up 10.4 percent from November. Wall Street analysts had expected the deficit to grow to $35.8 billion.
As economies start to recover, demand is picking up for American exports like soybeans and auto parts. Exports rose 3.3 percent in December to $142.7 billion, continuing an upward trend. That was not enough, however, to offset the 4.8 percent increase in imports, which totaled $182.9 billion.
“That’s consistent with the rebound in manufacturing activity,” said Julia Coronado, senior United States economist at BNP Paribas. “Companies have to increase production to meet demand, and that requires a lot of imported goods, so in the near term we will probably see further widening.”
The larger-than-expected trade gap could mean that the government will have to revise its estimate for economic expansion in the fourth quarter of last year. Last month, the government said the economy expanded at a rate of 5.7 percent from October to December — the fastest pace in six years — aided by a rise in exports.
A weak dollar has made American products — everything from airplanes to microchips — cheaper for many foreign consumers.
“Exports will continue to be boosted by better economic conditions abroad,” Joshua Shapiro, chief United States economist for MFR Inc., wrote in a research note on Wednesday.
Oil imports rose sharply in December, contributing to the swelling trade gap, reaching $28.1 billion from $24.4 billion in November. In recent months, fluctuations in the price of oil have often been a central reason for the widening trade deficit. But that was not the case in December — the price of oil remained relatively steady, and businesses simply imported larger quantities of petroleum. Excluding oil, the trade deficit in December was little changed from November.
The politically important trade gap with China narrowed slightly in December, retreating 10.3 percent.
Source: NY Times
Subscribe to News and Reports
Recent comments