News

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4.7

Andrew R. Michaud

• January 09, 2024

The U.S. trade deficit narrowed down by 2% to $63.2 billion in November, mainly due to a decline in imports. This positive development is expected to have a potential impact on the gross domestic product (GDP) for the fourth quarter. In fact, the U.S. trade deficit in 2023 is predicted to be the smallest it has been in three years. This contrasts with the record deficits experienced in 2021 and 2002, which had a significant negative effect on GDP.

Key Details

In November, imports experienced a decline of 1.9%, totaling $316.9 billion. The decrease in imports can be attributed to a shift in spending by U.S. consumers, who have redirected their focus from goods to services like leisure and recreation.

On the other hand, U.S. exports also fell by 1.9% in November, reaching $253.7 billion. Despite the widespread economic weakness in foreign economies, U.S. exports are still near an all-time high.

The Big Picture

The trade deficit is not expected to have a detrimental impact on GDP growth in the fourth quarter. Forecasts indicate that the economy likely expanded at an annual pace of 2.5%.

Looking ahead to 2024, the outlook for trade is uncertain. Although the U.S. economy has managed to avoid a recession, its growth has slowed down. Furthermore, foreign economies are facing even more challenges.

Market Reaction

In Wednesday trades, the Dow Jones Industrial Average (DJIA) and S&P 500 were projected to open lower.