Imports point to soft fourth-quarter growth but firmer spending

Fri Jan 11, 2013 9:07am EST
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By Jason Lange

WASHINGTON (Reuters) - Trade deficit unexpectedly widened in November, a drag on economic growth, although the increase was driven by a surge in consumer goods imports, which gives a positive signal for consumer spending.

Other data on Friday showed declining prices for U.S. imports and exports, a sign of the chill in the global economy that is hurting exporters but giving respite to U.S. drivers stung by high fuel prices.

America's trade deficit widened 16 percent in November to $48.7 billion, the Commerce Department said.

Analysts were expecting the deficit to shrink to $41.3 billion, and the report led some economists to consider trimming their forecasts for economic growth in the fourth quarter.

"This is not good news for the fourth quarter GDP growth," said Peter Cardillo, an economist at Rockwell Global Capital in New York.

When a country imports more than it exports, cash is sucked out of its economy, subtracting from gross domestic product.

The trade deficit was the widest since April, and its expansion was driven by a 3.8 percent increase in imports, the largest gain in eight months.

Imports of consumer goods rose by $4.6 billion, while imports of petroleum products fell by $870 million.   Continued...

A cargo ship sits at the dock at a port of Miami, October 4, 2007. REUTERS/Carlos Barria