Analysts had expected a $59.5 billion trade deficit for November 2007. Imports increased 3% to a record $205.4B while exports increased to a record $142.3 billion. November's $63.1 billion total was the largest monthly deficit since September 2006.
Crude reality
The key driver of the unexpected deficit jump was the importation of oil. The United States spent a record $79.7 billion in November 2007 on oil imports, driven by, for equal measure, a record average price for a barrel of oil -- $79.65, which was up $7.16. In non-inflation-adjusted terms, November 2007's trade deficit was 8% higher than a year ago.
"It's a disappointing number, but one has to qualify that by noting that the oil imports skewed the numbers somewhat. Without the increase in oil imports from oil's record price, the trade deficit is decreasing, driven by the weaker dollar and increased exports," economist Steve Affinito told BloggingStocks Friday. "That said, we still have to reduce our imports of foreign oil."
Bright spot
One bright spot: imports from China declined to $29.8 billion in the month, but analysts are quick to point out that shipments from China totaled a very-high $31.6 billion in October 2007, and overall the U.S. trade deficit with China is up 11% to $237.5 billion during the past 12 months.
Also, foods / feeds exports increased 5.5%, on strong corn and soybean exports. Affinito said he expects the U.S. trade deficit to continue to decrease in 2008 and in 2009.
"So long as global growth remains adequate, and it should, U.S. exports should increase, while our imports should slow somewhat on lower demand, due to a slowing U.S. economy," Affinito said. "Our companies, particularly in agriculture, are getting better prices for their products, and that's helping as well, so look for the trade gap to continue to shrink."
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