U.S. Trade Gap Balloons 9.3%

Jan. 11, 2008
Crude oil prices to blame

The U.S. trade deficit widened 9.3% in November to a bigger-than-expected $63.1 billion, mainly due to surging crude oil costs, the Commerce Department said on Jan. 11. Most economists had only anticipated that the deficit would widen to to around $59.5 billion.

The trade gap grew as imports rose 3% to $205.4 billion and as exports increased 0.4% to $142.3 billion.

October's deficit was recorded at $57.8 billion, and had also widened from the prior month amid spiking oil prices. For the first 11 months of 2007 the deficit was gauged at $650 billion, compared with $698 billion during the same period of 2006.

Hopes that the deficit would narrow have been stymied by spiking oil prices and the price America, the world's biggest energy importer, has to pay to import oil. The price of imported oil struck a record $79.65 a barrel in November lifting the petroleum deficit to $30 billion , its highest level on record, the government survey showed. Oil prices have increased amid geopolitical angst, tight supplies and increased demand from rising economic powers like China and India.

The enlarged petroleum deficit was somewhat offset by lower imports of commodities and consumer goods, but the lower imports for these categories still failed to stop the overall deficit widening significantly late last year.

China's rising economic might continued to account for a hefty chunk of the deficit, despite a narrowing of the trade gap with China by 7.6% to $24 billion.

The deficit with the EU narrowed 12.6% to $10.4 billion, partly as a strong euro dented demand for EU-made goods, while the trade shortfall with Canada narrowed 12.1% to $4.7 billion.

Copyright Agence France-Presse, 2008

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