US trade gap stretches wider with sluggish recovery

The latest import and export figures for the USA are sending mixed signals about how the economy is performing.

The trade deficit showed the widest gap since the early summer at $47.8 billion, according to the latest figures for November issued by the Commerce Department.

Wall Street had predicted a $45 billion gap and the figures were up on October’s figure of 443.3 billion.

Imports showed the biggest increase since May – up 1.3% to $225.6 billion, with most of the spending on industrial supplies and oil.

For economist, a widening trade gap indicates consumers are buying more products and services from overseas, which reduces the market for home produced goods and brings down the gross national product.

As imports increased, exports fell back 0.9% to $177.8 billion.

Together, the figures speculate that global demand is slipping back but home consumer demand is rising.

For politicians the trade race between the US and China is the key economic indicator.

The trade deficit narrowed to $26.9 billion as US exports to China jumped to $9.9 billion – the highest level for a year.

Despite the general opinion that supports sluggish economic growth for the US in 2012, the real issue is collapse of European markets.

Unemployment and lack of production that under utilises resources is holding growth in Europe back.

Consumer confidence in the leading economies has taken a considerable knock from the triple effects of job losses, falling house prices and less spending power.

The fear is unless consumers in the US and Europe are encouraged to start spending, both markets will be mired in stagnant growth and may slip back in to recession.

The trade figures revealed US exports to eurozone countries were in deficit by 20.8% at $8.36 billion.

Shortfalls with other trading partners also increased – Canada leapt by around a third to $2.98 billion, Mexico by 4.8% to $5.51 billion and Japan by 0.1% to $6.21 billion.