US Trade Deficit Widens to $50 Billion

The US trade deficit increased more than expected in November as imports of goods surged to a record high amid strong domestic demand, making it likely that trade will subtract from economic growth in the fourth quarter.

The commerce department said on Friday the trade gap widened 3.2% to $50.5 billion. That was the highest level since January 2012 and followed an upwardly revised $48.9 billion shortfall in October, CNBC reported.

Economists polled by Reuters had forecast the trade deficit increasing to $49.5 billion in November after a previously reported $48.7 billion deficit in the prior month.

Part of the rise in the trade deficit in November reflected price increases. When adjusted for inflation, the trade deficit rose to $66.7 billion from $65.6 billion in October. The so-called real trade deficit for October and November was above the third-quarter average of $62 billion.

That suggests trade will probably subtract from gross domestic product in the October-December quarter. The chronic trade deficit has garnered the attention of Republican President Donald Trump, who has blamed it for the massive loss of US manufacturing jobs as well as moderate economic growth.

The government reported last month that trade contributed 0.36 percentage point to the economy’s 3.2% annualized growth pace in the third quarter. The Trump administration believes that a smaller trade deficit, together with deep tax cuts, could boost annual economic growth to 3% on a sustained basis.

Imports of goods jumped to a record high of $204 billion in November. Capital goods imports were the highest on record. Imports of consumer goods rose to their highest level since March 2015. The strong growth in imports is being driven by robust consumer demand.

The country’s import bill was also pushed up by imports of industrial supplies and materials, which were the highest since January 2015.