MercoPress, en Español

Montevideo, February 6th 2023 - 12:47 UTC

 

 

US trade deficit contracts the most in 14 years; fears the Fed is hiking rates too fast

Tuesday, January 10th 2023 - 10:28 UTC
Full article
The Federal Reserve last year hiked its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007. The Federal Reserve last year hiked its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007.

The United States trade deficit contracted by the most in nearly 14 years in November as slowing domestic demand amid higher borrowing costs depressed imports.

The trade deficit decreased 21.0% to US$ 61.5 billion, the lowest level since September 2020, the Commerce Department said on January 05. The percentage decline in the trade gap was the largest since February 2009.

Imports tumbled 6.4% to US$ 313.4 billion, with goods dropping 7.5% to US$ 254.9 billion. Consumer goods imports were the lowest since December 2020.

The Federal Reserve last year hiked its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007.

Last month, it projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023. The higher rates have boosted the dollar, which gained 5.4% against the currencies of the United States’ main trade partners last year.

Dollar strength is making U.S. manufactured goods less competitive on global markets. Monetary policy tightening by global central banks is also eroding demand.

Exports fell 2.0% to US$ 251.9 billion, with goods shipments dropping 3.0% to US$ 170.8 billion. But exports of automotive vehicles, parts and engines were the highest since August 2019.

The Federal reserve Open Market Committee is scheduled to meet for two days next January 31st and February first.

Categories: Economy, United States.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!