The U.S. trade gap rose to a six-year high in November. This was driven by an increase in imports as American consumers increased their purchases of household items, luxury goods, and other products.
According to the U.S. Commerce Department, the trade deficit increased by 3.2% from the previous month to $50.5 billion. Both imports and exports rose, causing the deficit to expand. Exports increased 2.3% and imports rose 2.5%. Prior to accounting for inflation, U.S. trade reached record highs in November 2017.
In 2017, U.S. exports grew 5.6% from January through November compared with the same period in 2016, while imports climbed 6.7% over that period. Furthermore, the trade gap increased 11.6% over that period.
Recent information on the trade deficit will carry implications for the U.S. economy. The increase in imports suggests that Americans are now becoming more confident in the economy and are spending more money. This serves as a sign of fundamental economic stability.
On the other hand, an increase in imports means that American consumers are spending a lot of money abroad rather than domestically. Therefore, benefiting foreign companies and restraining gains in U.S. production and output. This is one of the factors that has contributed to the growth of some of America’s biggest trade rivals such as Germany, Mexico, China, and Japan, and South Korea.