A Ferrari cargo crane moves shipping containing on a U.S. trade port. (Photo: Reuters)
The Commerce Department said Wednesday the U.S. trade deficit narrowed 5.0% to $42.4 billion in November, but inventory and export data signal weak 4Q (gross domestic product) GDP. While it is widely believed that inventories fueled much of the drop in imports, the weak data also suggest a slowdown in domestic demand (consumer spending), which was further underscored this month by weaker-than-expected automobile sales in December.
Efforts by businesses to clear inventories pushed imports to their lowest level in nearly five years, outpacing the decline in exports. Trade sliced off 0.26 percentage point from the abysmal 2% GDP growth in the 3Q, and economists this week slashed their fourth-quarter GDP growth estimates by as much as 1% to as low as a 0.5% annual pace.
Economists polled by Reuters had forecast the U.S. trade deficit widening to $44.0 billion and, when adjusted for inflation, the trade deficit fell to $59.60 billion from $61.03 billion in October. Further, October’s trade deficit was revised up to $44.6 billion from the previously reported $43.9 billion.
