A Commerce Department report revealed that exports also fell in November, marking a global slowdown in demand following aggressive interest rate increases by global central banks, including the Federal Reserve.
In a turn that no one projected, the US trade deficit fell sharply in November, mainly due to a significant drop in imports of consumer goods, reaching a minimum of one year. This drop is attributed to the slowdown in domestic demanda trend that could neutralize the impact of trade on economic growth in the fourth quarter.
The report of Department of Commerce also revealed that exports fell in November, signaling a global slowdown in demand following significant increases in interest rates by central banks, including the Federal Reserve, from 2022. These events have led to a 2% contraction in the trade deficit, placing it at US$63.2 billion.
The decline in imports was marked, falling 1.9% to US$316.9 billion, with a 2.3% drop in imports of goods, standing at US$257.4 billion.
Imports of consumer goods led the decline, falling by US$4.1 billion. This largely led to a decrease in cell phones and other household goods. Meanwhile, crude oil imports auThey were quoted at US$1.5 billion. On the other hand, imports of capital goods decreased, suggesting a continuation of weak business investment in equipment. On the other hand, exports also decreased by 1.9%, with goods exports falling to US$168.0 billion due to lower shipments of industrial materials supplies, including crude oil.
Trade deficit: what the market projects
The data raises questions about the pace of the global economic recovery and its impact on U.S. trade. The focus is on December trade numbers and the fourth quarter GDP release for further clues on the economic trajectory. Despite the moderation in trade flows, Broader concerns about slowing demand and potential disruptions such as the attacks in the Red Sea remain paramount.
The goods trade deficit saw a slight contraction, declining 0.6% to $89.4 billion. When adjusted for inflation, the goods trade deficit fell more significantly by 2.7% to $84.8 billion. This real goods trade deficit averages about $86.0 billion in the fourth quarter, roughly consistent with the third quarter.
Prior to this data release, Economists had anticipated a slight slowdown in GDP due to trade in the fourth quarter. However, economists Goldman Sachs have revised upward their GDP growth estimate for the quarter, reflecting the impact of the Federal Reserve’s interest rate hikes and business expectations of slower demand.
The trade deficit with China also narrowed, decreasing from $2.4 billion to $21.5 billion, with a notable drop in Chinese imports. Despite possible disruptions in the Red Sea and Panama Canal impacting shipping routes and costseconomists expect a modest impact on trade United States.
Source: Ambito
