Ahead of the Bell: US Trade Gap
WASHINGTON (AP) — The Commerce Department reports on the U.S. trade deficit for December. The report will be released at 8:30 a.m. EST.
WIDER DEFICIT: The forecast is that the gap between what the U.S. exports and what it imports widened to $36 billion in December, according to a survey by FactSet. The deficit had been $34.3 billion in November, the lowest level in four years.
TRADE PERFORMANCE: Gains in energy production and sales of American'-made planes, autos and machinery lifted exports to a record level in November.
A smaller trade deficit can boost economic growth. U.S. manufacturers gains from rising export sales while U.S. consumers are buying fewer foreign-made products.
Through the first 11 months of 2013, the trade deficit was 12.3 percent lower than the same period in 2012. Exports have strengthened while imports are down.
A domestic energy boom has boosted exports and lessened America's dependence on foreign oil. U.S. oil exports were up 10.8 percent through the first 11 months of 2013 while petroleum imports are down 11.5 percent. The drop in imports has been helped by falling global oil prices.
Some economists believe that further gains in trade could contribute as much as one-half percentage point to growth next year.
Many analysts are expecting 2014 may be the year that the economy finally ramps up to stronger growth of around 3 percent. In 1013, the economy grew at a sub-par 1.9 percent rate.
The U.S. deficit was poised to set another record in 2013, a widening imbalance that is adding to political pressure on Congress and the Obama administration to crack down on what critics see as China's unfair trade practices. U.S. manufacturers contend that China is keeping its currency undervalued against the dollar by as much as 40 percent in order to gain trade advantages. A weaker Chinese currency makes Chinese goods cheaper for U.S. consumers and American products more expensive in China.
The hope is that an improving global economy will lift U.S. exports. But there have been worries recently stemming from plunging currency values in a number of emerging market economies as investors have grown worried about what impact the Federal Reserve's decision to lower its support for the U.S. economy might have on emerging market nations.