U.S. Trade Gap Highest In Nine Years in December
By Harriet Torry and Sarah Chaney
WASHINGTON--The U.S. posted its largest monthly trade deficit in nine years in December, as strong U.S. consumer demand meant imports outpaced exports.
The foreign-trade gap in goods and services expanded 5.3% from the prior month to a seasonally adjusted $53.1 billion in December, the highest since October 2008, the Commerce Department said Tuesday.
Economists surveyed by The Wall Street Journal had expected a trade deficit of $52.0 billion.
Imports increased 2.5% in December to a record $256.5 billion, reflecting higher imports of consumer goods like cellphones in a key month of the holiday season, as well as higher imports of vehicles and capital goods.
Exports, meanwhile, rose 1.8% to $203.4 billion. Exports of industrial supplies like chemicals grew, as did exports of capital goods like civilian aircraft.
In December, the WSJ Dollar Index, which measures the U.S. currency against 16 others, fell 0.6%. For the year as a whole, it dropped 7.8%. A weaker dollar supports American manufacturers by making exports relatively cheaper for foreign consumers. Last year was also marked by strong growth in consumer spending, which supports purchases of imported products.
Figures on international trade can be volatile from month to month. In 2017 as a whole, the value of U.S. imports rose 6.7% and U.S. exports increased 5.5% on the year. The overall trade deficit expanded 12.1% compared with 2016.
The U.S. economy has run trade deficits for decades, during both economic expansions and recessions, which economists say reflects the fact that Americans consume more than they produce relative to the rest of the world.
Last year the gap reached $566.0 billion, led by a $375.2 billion imbalance with China -- the highest on record.
While the U.S. imports more goods than it exports, it runs a modest trade surplus for services. That services surplus narrowed slightly last year, decreasing 1.5% compared to 2016.
The volume of trade grew last year because the U.S. and most major economies globally were in a rare sweet spot of near-simultaneous expansion.
Trade deficits in goods with China, Mexico and Canada-which collectively account for more than half of total U.S. goods imports and exports-all widened in 2017, compared with the prior year, the Commerce Department said.
Reflecting relatively low oil prices and domestic energy production that is still historically robust, the real dollar petroleum deficit was the lowest on record at $95.9 billion.
The trade deficit took a toll on U.S. economic growth during the fourth quarter. Net exports subtracted 1.13 percentage points from the overall 2.6% growth rate in gross domestic product.
The Trump administration has made narrowing the trade deficit a goal, but that is difficult to do when the domestic economy is expanding and consumers' appetite for foreign-made goods is strong.
The Commerce Department's latest report on foreign trade can be accessed at: https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
Write to Harriet Torry at firstname.lastname@example.org and Sarah Chaney at email@example.com
(END) Dow Jones Newswires
February 06, 2018 08:45 ET (13:45 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.