WASHINGTON (AP) — The U.S. trade deficit in December jumped to the highest level in more than two years as American exports fell and imports climbed to a record level.
The deficit jumped 17.1 percent to $46.6 billion in December, the biggest imbalance since November 2012, the Commerce Department reported Thursday. The widening trade gap reflected a drop in exports, which fell 0.8 percent to $194.9 billion. Imports soared 2.2 percent to $241.4 billion.
The deficit for all of 2014 increased to $505 billion, up 6 percent from the 2013 deficit of $476.4 billion. Economists expect the deficit to widen further in 2015 as strong growth in the United States boosts imports, while weak growth overseas and a rising dollar continue to depress exports.
Economists were split on whether the bigger-than-expected December trade deficit would result in a significant revision in the government's 2.6 percent initial estimate for overall growth in the fourth quarter.
Paul Ashworth, chief U.S. economist at Capital Markets, said he believed much of the December trade balance was already reflected in the government's GDP estimate. But Jennifer Lee, senior economist at BMO Capital Markets, said she thought the trade gap figures, along with weaker growth in business stockpiles, could trim as much as a 0.5 percentage point from the government's initial estimate.
"This is not good news for the final measure of economic growth," she said in a research note.
The government estimated last week that the overall economy grew at a moderate 2.6 percent rate in the final three months of 2014 after turning in a sizzling 5 percent growth rate in the July-September period. Part of the slowdown reflected a swing in trade, which boosted growth by 0.8 percentage point in the third quarter but reduced growth by 1 percentage point in the fourth quarter.
The politically sensitive deficit with China set a record for 2014, rising 23.9 percent to $342.6 billion. The United States deficit with China surpassed the deficit with Japan in 2000 and since then, the trade gap with the world's No. 2 economy has set a record nearly every year.
Those deficits are creating pressure on Congress and the Obama administration to take tougher actions against what critics see as China's unfair trade practices. U.S. manufacturers contend that China is manipulating its currency to keep it artificially low against the dollar as a way to make American products more expensive in China's market and Chinese products cheaper in the United States.
The $505 billion deficit for the year was the largest imbalance since a $537.6 billion deficit in 2012.
For the whole year, trade trimmed economic growth by 0.2 percentage point. The economy grew 2.4 percent in 2014, and many economists believe growth in 2015 will be slightly above 3 percent, giving the country the best growth in a decade
The trade deficit would have been even larger last year if it weren't for the energy boom in the United States. Higher production at home has been lowering America's reliance on foreign oil. For the year, petroleum imports fell 9.6 percent to $334.1 billion, the lowest level for imports since 2009. U.S. petroleum exports jumped 5.9 percent to a record $45.7 billion.
The widening trade deficit comes at a time when the administration is hoping to finally get Congress to approve the fast-track authority it needs to wrap up a major 12-nation trade agreement with Pacific Rim countries known as the Trans-Pacific Partnership.
The administration sees the trade deal as one of the areas where he may be able to find common ground with Republicans, who now for the first time in his presidency control both houses of Congress.
For 2014, the deficit with the European Union climbed 12.5 percent to a record $141.1 billion, as growth in imports outpaced U.S. export sales to Europe.
The U.S. deficit with Mexico fell to $53.8 billion, the lowest since 2009. The United States ran a record surplus of $34.4 billion with the countries of South and Central America.