The U.S. trade deficit in goods widened in November amid a drop in exports and rising imports, suggesting the challenge awaiting President-elect Donald Trump as he tries to fulfill his campaign pledge to reduce the trade shortfall.
In an initial estimate that does not include trade in services, the Commerce Department on Thursday said the deficit rose $3.4 billion, or 5.5%, to $65.3 billion from a month earlier. Exports of goods fell by $1.2 billion to $121.7 billion while imports totaled $187 billion, up $2.2 billion from October.
“It appears net trade will again be a drag” on economic growth in the fourth quarter, said Michael Gapen, an economist at Barclays in New York.
Stephen Stanley, chief economist at Amherst Pierpont Securities, lowered his estimate for fourth-quarter gross domestic product growth to 1.8% from 2%. But retail inventories climbed 1.0% in November while wholesale inventories increased 0.9%, which, according to Reuters, “could provide a temporary boost to economic growth.”
As Reuters reports, Trump campaigned heavily on promises to reduce America’s trade deficit and bring back jobs that moved abroad to countries with lower costs for manufacturing. “Working against him could be a stronger U.S. dollar which could weigh on U.S. exporters,” Reuters said.
The dollar has surged about 5% since Trump won the Nov. 8 presidential election as investors bet wider budget deficits under his presidency will trigger higher inflation and more interest rate increases by the Federal Reserve.
Elsewhere, the Labor Department reported Thursday that initial jobless claims, a proxy for layoffs, decreased by 10,000 to a seasonally adjusted 265,000 in the week ended Dec. 24, matching economists’ expectations.
“On the whole, we continue to expect further improvement in labor market conditions,” Gapen said in a note to clients.
Jobless claims have now hovered below 300,000 for 95 consecutive weeks, the longest such streak since 1970 when, as The Wall Street Journal reports, the U.S. workforce and population were far smaller than they are today.