US trade deficit up in December to $38.7 billion

The trade deficit increased to $38.7 billion in December, a 12 percent increase over November, the Commerce Department reported Thursday. U.S. exports slipped 1.8 percent to $191.3 billion while imports were up 0.3 percent to $230 billion.

For all of 2013, the deficit dropped 11.8 percent to $471.5 billion, the lowest level since the Great Recession caused the deficit to shrink in 2009.

U.S. exports rose 2.8 percent, as an improving global economy benefited American manufacturers and an energy production boom lifted U.S. petroleum exports to a record level. Imports dipped 0.1 percent.

A smaller trade deficit can boost economic growth. U.S. manufacturers gain from rising export sales while U.S. consumers are buying fewer foreign-made products.

The improvement in the trade deficit in 2013 contributed about 0.1 percentage point to the modest 1.9 percent growth. Economists expect that trade will continue to support the economy in 2014.

A domestic energy boom has boosted exports and reduced America's dependence on foreign oil. U.S. petroleum exports were up 10.9 percent in 2013 to an all-time high of $137 billion while imports were down 11 percent to $369.3 billion. The drop in imports was helped by falling global oil prices.

By country, the U.S. ran another record trade deficit with China, $318.4 billion for the year, an increase of 1 percent from 2012. The United States has recorded its largest trade deficit with China each year since 2000 when that country supplanted Japan as the nation with the largest trade imbalance with the United States.

That is likely to add to political pressure on Congress and the Obama administration to crack down on what critics see as China's unfair trade practices. U.S. manufacturers contend that China is keeping its currency undervalued against the dollar by as much as 40 percent in order to gain trade advantages. A weaker Chinese currency makes Chinese goods cheaper for U.S. consumers and American products more expensive in China.

The U.S. deficit with the 28-nation European Union rose 8 percent to a record $125.1 billion in 2013.

Many analysts are expecting 2014 may be the year that the economy finally ramps up to stronger growth of around 3 percent. In 2013, the economy grew at a sub-par 1.9 percent rate.

The hope is that an improving global economy will lift U.S. exports. But there have been worries recently stemming from plunging currency values in a number of emerging market economies as investors have grown worried about what impact the Federal Reserve's decision to lower its support for the U.S. economy might have on emerging market nations.