US Trade Deficit Grows to $42.2 Billion in October
WASHINGTON - The U.S. trade deficit increased in October because exports fell by a larger margin than imports, a sign that slower global growth could weigh on the U.S. economy.
The Commerce Department said Tuesday that the trade deficit grew 4.8 percent in October from September to $42.2 billion.
Exports dropped 3.6 percent to $180.5 billion. Sales of commercial aircraft, autos and farm products all declined.
Imports fell 2.1 percent to $222.8 billion, reflecting fewer shipments of cell phones, autos and machinery.
The trade gap with China also increased to a record high, which will keep pressure on the Obama administration. Manufacturers and U.S. lawmakers have complained about China’s use of unfair trade practices.
Paul Dales, senior U.S. economist at Capital Economics, said the decline in both exports and imports likely reflected some disruptions from Superstorm Sandy. The storm closed ports in the Northeast for the last few days of October. Exports should rebound in November, although Dales expects the longer-run trend to stay negative.
"The bigger issue is that the weak global economy has been taking its toll on exports," Dales said, predicting that trade would drag slightly on overall U.S. growth in 2013.
A wider trade deficit acts as a drag on U.S. growth. It typically means the U.S. is earning less on overseas sales of American-produced goods while spending more on foreign products.