US Trade Deficit Unexpected Widened In November As Consumers Bought Cell Phones And Foreign Cars, May Signal Weak 4th Quarter GDP

A surge in purchases of cell phones and foreign cars in November unexpectedly widened the U.S. trade deficit to a seven-month high, in the latest sign that U.S. economic growth in the fourth quarter could be a paltry 1 percent.

The world's No. 1 economy exported $182.6 billion and imported $231.3 billion in November, resulting in a deficit of $48.7 billion, up from $42.1 billion in October and a 16 percent jump. Analysts had expected a November deficit of about $41.3 billion.

November exports rose by $1.7 billion over October’s $180.8 billion, while imports climbed $8.4 billion from October’s $222.9 billion.

“The unexpected widening in the trade deficit to a seven-month high of $48.7 billion in November, from $42.1 billion, is not good news for fourth-quarter GDP growth,” said Paul Ashworth, chief U.S. economist for Capital Economics. “It looks like GDP growth was between 1 percent and 1.5 percent annualized.”

Adjusting for inflation, the November deficit climbed to a four-year high of $51.9 billion, Ashworth said.

Much of November’s widened balance of trade deficit came from U.S. consumers buying foreign cars, purchases of which surged 6.3 percent from October’s level. Purchases of cell phones leaped more than 27 percent.

While November’s numbers bode ill for the fourth-quarter GDP, there may be – longer term – a silver lining.

"The good news is the strength in imports is a sign that the U.S. economy is buying imports," Cary Leahey, an economist at Decision Economics in New York, told Reuters. "Whatever the fourth quarter GDP prints, it will understate the momentum."