The U.S. trade deficit in October fell to its smallest level since mid-2009, reaching $29.4 billion, according to the Commerce Department’s report on Thursday (January 8). This 39% decrease from the previous month marks the lowest trade shortfall since the country was emerging from the Great Recession. The decline comes six months after President Donald Trump implemented tariffs aimed at boosting U.S. exports and curbing imports.
Exports rose by 2.6%, setting a record at $302 billion, while imports fell by 3.2% to $331.4 billion. The drop in imports was largely due to decreased consumer goods, particularly a $14.3 billion reduction in pharmaceutical preparations, as reported by Yahoo Finance. However, imports of capital goods, including computer accessories and telecommunications equipment, increased, likely due to investments in artificial intelligence.
Economists had expected the trade deficit to rise to $58.9 billion, but the actual figures suggest a positive impact from the tariffs. Despite concerns about potential retaliation from trading partners, U.S. exports have remained strong. The reduction in the trade deficit is expected to boost economic growth in the fourth quarter, despite challenges like the recent government shutdown.
The Atlanta Federal Reserve forecasts a 2.7% GDP growth rate for the fourth quarter, following a 4.3% growth rate in the third quarter. This trade activity has been pivotal in supporting U.S. economic growth amid ongoing global trade tensions.
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