The numbers: The nation’s trade deficit rose 5.4% in October to a four-month high of $78.2 billion, reflecting a small decline in the appetite for American goods and services as the global economy weakens.
Economists polled by The Wall Street Journal had forecast a $80 billion shortfall.
The deficit widened from $74.1 billion in September, the government said Tuesday.
Key details: Exports declined for the second month in a row after reaching a record high in August. They slipped 0.7% to $256.6 billion.
Exports have been hurt by slower economic growth in other countries and a strong dollar that’s made American goods and services more expensive.
The falling cost of oil has also reduced the amount of money generated by U.S. energy producers. Softer economic growth tends to depress demand for oil and gas.
In October, the value of energy exports declined, as did shipments of Covid-related drugs and consumer goods.
Imports rose 0.6% to $334.8 billion, but they are well off March’s all-time high. Americans are spending a bit less on goods and minding their money given talk of recession.
The U.S. imported more oil, metals and nuclear materials in October.
The trade deficit has had an unusually large effect this year on gross domestic product, the official scorecard of the economy.
A record gap triggered a decline in GDP in the first quarter. Then a shrinking deficit gave a huge boost to third-quarter economic growth.
Big picture: Chronically high U.S. trade deficits rarely tell us much about the health of the economy, but the details of the report are sometimes telling.
What they are telling us now is that demand for business goods and services has gotten softer at home and abroad.
That portends weaker economic growth as central banks around the world combat high inflation with the tough medicine of rising interest rates.
Looking ahead: “Trade flows are likely to slow as monetary policy actions globally weigh on demand,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.