US Trade Gap Widens to Highest Level Since 2012 Sean Gallup/Getty Images

US Trade Gap Widens to Highest Level Since 2012

Overall in December, imports, excluding petroleum products, rose 2.2% to $241.4 billion. Exports fell 0.8% to $194.9 billion.

The trade deficit in the U.S. took a big leap in December, hitting its highest level in more than two years.

The Commerce Department report shows a hike of 17.1% to $46.6 billion. The percentage is the biggest jump since July of 2009.

That number could be revised down on lower energy costs, but according to Reuters, is still way off from analysts’ forecasts.

Overall in December, imports, excluding petroleum products, rose 2.2% to $241.4 billion. Exports fell 0.8% to $194.9 billion

The latest numbers show President Obama isn’t dealing with the widening trade gap like he said he would, that according to Alliance for American Manufacturing President Scott Paul:

“The surge in imports and drop in exports tells me three things: the overly strong dollar is going to be a major drag on growth in 2015, the TPP must including binding currency manipulation deterrents, and the president isn't keeping his promise to get tough on China.

“This trade deficit spells trouble for the Obama administration's trade agenda. And it shows just how far we have to go to really spur reshoring and secure more good-paying jobs for American

Calling the report “disappointing” with implications on interest rates, TD Senior Economist Michael Dolega said:

“Along with the more valuable greenback, this appears to be already spilling over to U.S. exports. International developments have recently been explicitly added by the Fed to the information set on which the FOMC bases monetary policy. This appears to have been done just in time, with this morning's data likely to make the Fed all the more patient in raising interest rates.”

One area making gains in exports is energy. Exports of petroleum products added $8.1 billion while imports fell by $35.6 billion. API Chief Economist John Felmy says the sector is transforming the trade balance:

“We’re importing less oil than at any time in nearly 30 years, consumers are saving billions on energy, and tens of thousands of U.S. workers have jobs producing petroleum and petroleum products for export. Growth in the U.S. oil and natural gas industry served as the central pillar of U.S. strength in the international market last year, helping to offset categories of trade where U.S. businesses lost ground.“

A breakdown of some key markets shows the monthly U.S. goods deficit with China grew in December to $30.4 billion, up from $29.9 billion in November.

In trade with Japan, the U.S. goods deficit rose in December to $5.7 billion, up from $5.5 billion in November.

Exports also dipped slightly to Canada and Mexico.

 

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