Economic Report: U.S. trade deficit widens sharply in November on rush to get consumer goods ahead of holidays
The numbers: The U.S. trade gap widened to $80.2 billion in November from a revised $67.2 billion in the prior month, the Commerce Department said Thursday. After narrowing sharply in October, the deficit is now just shy of the record $81.4 billion set in September.
The U.S. is also on track to post a record annual trade deficit. The annual figures will be reported next month.
Key details: Imports into the U.S. surged 4.6% to $304.4 billion in November. Companies rushed to retrieve imported goods in time for the holiday shopping season. Imports of industrial supplies also jumped. The goods deficit hit a record high.
U.S. exports inched up 0.2% to $224.4 billion.
The overall trade deficit remained smaller than September due to higher exports of services as more foreign tourists visited the U.S., said Bill Adams, senior economist at PNC Financial Services Group.
The trade surplus in services rose to $18. 8 billion in November from $16.7 in October.
Adjusted for inflation, the real goods deficit widened $13.7 billion to $110.8 billion in November.
Big picture: The deficit is expected to be flat to positive for fourth quarter GDP growth.
The chief reason for the surge in the deficit is that the U.S. economy rebounded more quickly from the pandemic than other countries. Aided by stimulus money, Americans could afford to buy more imports. And U.S. exports lagged.
The economy is still growing steadily and has exceeded pre-pandemic levels, but it faces a fresh challenge from soaring omicron cases in the U.S. and elsewhere. The virus could disrupt global trade again and set back effort to clear up the congestion at West Coast ports.
What are they saying? “Looking ahead, we expect the trade deficit to remain historically elevated until pandemic worries ease. Rising covid cases abroad once again threaten to constrain global demand, risking an even wider deficit if export growth slows more than imports,” said Nancy Vanden Houten, economist at Oxford Economics.
The trade deficit will be “a tailwind throughout 2022 as consumer spending redirects toward services and away from most consumer goods. The recovery of U.S. auto production this year as carmakers get past the chip shortage will also reduce the trade deficit,” said Adams of PNC Financial.