Economic Forecasts

U.S. Trade Deficit Widens in November, Erasing October’s Improvement

Kiplinger's latest forecast on the direction of the trade deficit

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The trade deficit remains near a record high. The U.S. trade deficit in goods and services rose in November to a seasonally adjusted $80.2 billion, from a revised $67.2 billion in October, an increase of 19.4%. The widening in the deficit resulted from weaker goods exports and a surge in imports. This was likely due to retailers making a last-minute push ahead of the holiday shopping season. Through November, the nominal trade deficit was averaging $73.7 billion in the fourth quarter, compared with $75 billion in the prior three months. Supply disruptions stemming from the global spread of the omicron variant could weigh on trade in both directions, and may cause some volatility in the month-to-month movement of the trade balance in coming months.

Total exports were basically flat in November, rising just 0.2% and reversing October’s large gain. Goods exports fell 1.8%. Services exports rose 5% — the largest gain since the early 2000s. Following the lifting of restrictions on foreign travelers entering the United States, exports of tourism services rebounded.  Travel services, which account for nearly a quarter of all services exports, jumped 36%, while transport services rose 10.5%. Total imports rose 4.6% — the fourth consecutive monthly gain. Goods imports rose 5.1% in November, led by a 10.3% gain in industrial supplies. Automotive exports and imports both rose during the month, reflecting the easing of the semiconductor shortage.

Net trade is on track to be a small drag on fourth-quarter GDP. The much larger gain in imports during the quarter means that net trade will subtract from GDP growth.

Sources: Department of Commerce, Trade Data

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