Speed Reads

Exports Vs Imports

U.S. trade deficit exceeds expectations to reach 11-month low

U.S. trade deficit exceeds expectations to reach 11-month low

In November, the U.S. trade deficit beat expectations to hit an 11-month low. The balance of trade is how much the country imports from other countries versus how much it exports. When the former number is higher, there's a trade deficit. In November of 2014, that gap narrowed to $39 billion — from $42.2 billion that October — beating economists' expectations it would stick around $42 billion. The last time the deficit was this small was when it reached $37.4 billion in December of 2013, though the decrease is probably not enough to stop the deficit from being a drag on the economy.

America's exports actually dropped slightly in November, but imports fell even more, thanks largely to the dropping price of oil and the boom in domestic production. But there are also larger implications: when the U.S. dollar is stronger than other currencies, the trade deficit tends to increase, since it makes American exports more expensive. A trade deficit also means negative national savings by definition, which must be reflected in debt held either by Americans or by the federal government.

The modern trade deficit didn't actually appear until the 1980s, then closed in the early 1990s, and then expanded massively up until the Great Recession. Since then, it's fallen, but only slightly. --Jeff Spross