U.S. trade deficit widens in December

The U.S. international trade deficit widened in December to $43.4 billion from a $42.2 billion deficit in November. Exports fell for the third consecutive month, while imports rose.

Going forward, we expect that headwinds on U.S. GDP growth from the foreign sector will continue. The dollar continues to strengthen, especially against the currencies of many developing economies. Furthermore, economic growth in many foreign economies remain sluggish. This will adversely affect real export growth. On the other hand, continued growth in U.S. domestic demand, though at a modest pace, should cause real imports to continue to rise.