U.S. trade deficit jumps to $40.2 billion despite continued growth in exports
The U.S. trade deficit widened by an unexpectedly large margin in December as American exports continued to grow but imports rose at an even faster pace, largely because of a sharp increase in petroleum purchases, the Commerce Department reported Wednesday.
It was the third straight month of rising trade deficits -- and the surprisingly big jump in December, to $40.2 billion from $36.4 billion in November, suggested that U.S. economic growth in the fourth quarter, initially estimated at 5.7%, could be revised down slightly, said Paul Dales, an economist at Capital Economics.
The continued pick-up in trading activity, including the rise in volatile oil imports, reflects the rebound in the global economy and greater production demand in the United States. The increased petroleum imports came from higher quantities of purchases, not higher prices.
But the large and recently widening trade deficit underscores just how big a mountain President Obama must move to keep his pledge of bringing back lost jobs by selling more American goods overseas. Obama has stated a goal of doubling exports in five years, a feat last accomplished in the 1970s.
In December, U.S. exports of goods and services rose at a seasonally adjusted rate of 3.3% from November, to $142.7 billion. American imports grew by 4.8% in December, to $182.9 billion. That left a shortfall of $40.2 billion -- the highest since December 2008, when the deficit was $41.9 billion.
For all of 2009, the Commerce Department said, U.S. exports of goods and services totaled $1.55 trillion, while imports amounted to $1.93 trillion. The gap -- $380.7 billion -- was strikingly smaller than deficits of $695.9 billion in 2008 and $701.4 billion in 2007.
The sharply lower deficit last year mirrored the depth of the global recession and, in particular, plunging demand in the United States. American exports last year fell 15% from 2008 levels, but imports sank at a faster rate of 23%.
The politically sensitive trade deficit with China also narrowed last year, to a four-year low of $226.8 billion, from $268 billion in 2008. These bilateral trade figures don’t include exchange of services such as royalty fees and spending by foreign visitors -- of which the U.S. has long run a surplus. American exports of products are double those of services.
Many analysts expect U.S. exports of goods and services to grow robustly this year, at a rate of 10% or so, but imports are expected to climb nearly as fast. Some economists are estimating that imports will expand by 8% this year. If both of those scenarios played out, the overall trade deficit in 2010 would remain essentially unchanged. And if that were to happen, international trade wouldn’t contribute positively to the nation’s economic-output growth. Nor would it likely do a lot for overall employment. Though increased exports would boost demand for production and labor, analysts say, higher imports would tend to tamp down job growth as companies and consumers buy more goods made overseas.
With consumers burdened by debt and tight credit, and government spending restrained by deficits, many economists agree that expanding exports is a critical element if the country is to return to prosperity.
“We can be encouraged by U.S. exports of goods and services increasing in December for an eighth consecutive month,” Commerce Secretary Gary Locke said today. “However, it is critical we redouble our efforts to increase our competitiveness and meet President Obama’s goal of doubling U.S. exports over the next five years to spur economic growth and support jobs at home.”
