February 5, 2015 8:45 AM, EST

Trade Gap Rises to Two-Year High on Record Imports

SeongJoon Cho/Bloomberg News

Record imports and a slowdown in shipments to overseas customers pushed the U.S. trade deficit to a two-year high in December.

The trade gap in goods and services increased 17.1% to $46.6 billion, the biggest shortfall since November 2012, from a revised $39.8 billion in November, the Commerce Department reported Feb. 5 in Washington. The deficit was wider than any forecast in a Bloomberg News survey of 68 economists.

American companies imported a record $48.8 billion of consumer goods along with more industrial supplies and capital equipment, showing U.S. demand is holding up as global economies cool. Reducing the trade gap will probably be difficult because of slower demand from overseas markets and a rally in the U.S. dollar.

“Higher imports are actually a sign of domestic strength,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who projected a $44.4 billion trade gap. “Consumer demand is pretty strong and foreign goods are now cheaper for the U.S. consumer, which means we’ll import a lot more. On the other hand, the stronger dollar and softer global growth will slow exports quite a bit.”

The $6.8 billion widening of the trade gap was biggest on record. The median forecast in the Bloomberg survey called for a $38 billion deficit, with estimates ranging from $35 billion to $44.4 billion. The Commerce Department initially reported a $39 billion shortfall in November.

For all of 2014, the trade gap widened 6 % to $505 billion. Last year, the U.S. petroleum deficit, adjusted for changes in prices, was the lowest ever.

Other reports released at the same time showed claims for jobless benefits rose last week and worker productivity declined in the fourth quarter.

Exports fell 0.8% to $194.9 billion in December. Shipments of non-monetary gold dropped by $1.2 billion, while exports of petroleum also decreased. A work slowdown at West Coast ports may explain some of the decline in exports.

Imports increased 2.2% to a record $241.4 billion in December. Inbound shipments of motor vehicles climbed $938 million. Imports of industrial materials, including crude oil, also rose.

After eliminating the effects of price fluctuations, which generates the numbers used to calculate gross domestic product, the trade deficit increased to $54.7 billion in December, the widest since April 2008, from $48.7 billion a month earlier.

A report last week showed economic growth cooled in the fourth quarter, largely driven by a drop in exports, more imports and slower business investment, even as consumers ramped up spending. GDP rose at a 2.6% annualized rate following a 5% pace in the third quarter, Commerce Department figures showed.

In its advance estimate of GDP, the agency said trade subtracted 1 percentage point from growth.

The trade gap with China, the world’s second-biggest economy, widened in 2014 to an all-time high of $342.6 billion. The U.S. also had a record gap with the European Union.