October US Trade Deficit Grows

Date: December 07, 2016

Trade Deficit Rises 17.8 Percent, Biggest Gain Since March 2015

According to the latest Commerce Department data, the US trade deficit increased 17.8 percent to $42.6 billion in October, which is the biggest increase since March 2015 and the highest deficit since June of this year. Reuters reports the increase came as “exports of soybeans and other products fell, suggesting trade would be a drag on growth in the fourth quarter.” When adjusted for inflation, the deficit “rose to $60.3 billion from $54.2 billion in September.” RDQ Economics Chief Economist John Ryding is quoted saying, “This widening of the trade deficit at the start of the fourth quarter puts trade on track to subtract a little more than one percentage point from fourth-quarter GDP growth.” Following the Commerce Department’s trade and factory orders reports, the Atlanta Federal Reserve “cut its fourth-quarter gross domestic product estimate by three-tenths of a percentage point to a 2.9 percent rate.” The AP says that imports of consumer goods such as medicine, cell phones, and clothing increased, while exports of soybeans, gold, and artwork tumbled. The Wall Street Journal reports that economists had expected a 42.1 billion trade gap in October.

What This Means For Small Businesses

Small businesses are looking for signals that the US economy is robust before they plan future expansion. Data showing that the US trade deficit grew in October is not the positive signal small businesses were hoping for regarding the US economy. However, it remains to be seen whether the trade deficit will continue to grow in the months ahead, further destabilizing the US economy, or if October’s growth is just a one-time outlier along a general trend towards US economic growth and a reduced trade gap.

Additional Reading

The New York Times also covers the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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