A fleet of container ships stand in the Port of Oakland. Justin Sullivan, Getty Images

Record Imports Stretch US Trade Deficit

The gap increased 8.6% to $48.7 billion, with imports up 1.6% to $244.6 billion and exports unchanged at $195.9 billion.

The U.S. trade deficit widened in October to a nine-month high on record imports that reflect steady domestic demand, Commerce Department data showed Tuesday.

Highlights of Trade Balance

The gap increased 8.6% to $48.7 billion (above the estimated $47.5 billion) from a revised $44.9 billion in prior month that was wider than previously reported. Imports climbed 1.6% to $244.6 billion, boosted by mobile phones, apparel, household goods and service-related purchases. Exports, meanwhile, were unchanged at $195.9 billion as more shipments of petroleum were offset by declines of capital equipment and consumer goods.

Key Takeaways

The surge in imports probably reflected merchants preparing for the holiday-shopping season. Consumer goods imports increased almost $800 million, including a $303 million gain in cell phones and other household goods, as well as more inbound shipments of furniture, appliances, toys and clothing.

The shortfall in goods and services trade, if sustained, may weigh on economic growth in the fourth quarter after net exports added 0.43 percentage point to gross domestic product in the previous three-month period.

Steady consumer spending and a pickup in business investment will continue to drive demand for imports. At the same time, sales of American-made merchandise could improve as economies in the rest of the world advance.

The latest report also showed record imports from China led to a wider trade gap. Shipments from Mexico were also the highest ever, causing the U.S. gap with that country to expand in October.

Other Details

After eliminating the influence of prices, which renders the numbers used to calculate GDP, the trade deficit increased to $65.3 billion, also the largest since January, from $62.2 billion in the prior month. … The petroleum gap narrowed as a pickup in exports exceeded a gain in imports; excluding petroleum, the trade shortfall grew to $45.5 billion from $41 billion. … The merchandise trade deficit with China grew to $31.9 billion from $29.9 billion, on a seasonally adjusted basis; the gap with Mexico expanded to $6 billion from $5.1 billion. … Finally, exports and imports of goods accounted for about three-fourths of America’s total trade in 2016; the U.S. typically runs a deficit in merchandise trade and a surplus in services.

By Shobhana Chandra, with assistance from Jordan Yadoo

TAGS: The Economy
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