Trade Gap Hits Record High in November

The U.S. trade deficit ballooned to a record in November, fueled by brisk consumer demand, surging imports from Canada and Europe, and the highest oil prices in nearly three years.

Defying predictions of an improvement in the nation’s trade imbalance, the deficit shot up to $26.5 billion in November from $25.56 billion the previous month, the Commerce Department said Thursday.

The report gives fresh ammunition to protectionist forces ahead of this November’s election. Though surging imports tend to hold down inflation, many view them as a threat to American jobs.

Some analysts warned that the deficit was unsustainable and could undercut the dollar. Generally, the value of the dollar against other world currencies suffers when the trade gap rises because it means Americans will send more dollars abroad to pay for their imports than the U.S. will draw in from sales of exported goods.

Imports of foreign-made cars, telecommunications equipment, computer accessories and other products surged to an unprecedented $109.39 billion in November. Imports were driven by the booming U.S. economy as consumers plunged into the holiday shopping season, overshadowing record exports of $82.89 billion.

Separate government reports released Thursday offered further evidence of U.S. economic strength.

The number of Americans filing new claims for unemployment benefits last week dropped by 39,000 to 272,000 from 311,000 the week before, the Labor Department said.

A Philadelphia Federal Reserve Bank survey found that the mid-Atlantic region’s manufacturing sector expanded in January but at a slower pace.

Market reaction to the reports was muted.

The nation’s trade deficit has been on a tear during the last year, setting records month after month. Wall Street analysts had expected the deficit to shrink to $25.7 billion in November instead of continuing to swell.

The Commerce Department report reflected record imports from key U.S. markets, specifically Canada and Western Europe. By contrast, imports from Japan and China dropped.