WASHINGTON: A drop in exports of petroleum and other U.S. goods increased the deficit in the broadest measure of U.S. trade in the July-September quarter.
The Commerce Department said Thursday the current account deficit increased to $124.1 billion from $111.1 billion in the second quarter. The current account tracks trade in goods and services and investment flows.
Cheaper oil weighed on the export of U.S. goods, which fell to $379.9 billion in the third quarter from $384.7 billion in the previous three months. American businesses and investors also earned less on their holdings overseas, while foreigners earned more on their U.S. investments.
The strong dollar has also dragged down U.S. exports, because it makes American goods more expensive overseas. The dollar’s value has increased about 12 percent in the past year.
That trend is likely to continue now that the Federal Reserve has lifted short-term interest rates for the first time in seven years. At the same time, other major central banks, such as the European Central Bank and Bank of Japan, are still taking steps to lower rates and stimulate growth.
That discrepancy may cause investors to shift money into U.S. assets, which should start paying higher returns as interest rates rise. That, in turn, should further increase the value of the dollar.
The Fed said Wednesday that it will increase the benchmark rate it controls to a range of 0.25 percent to 0.5 percent. That will cause slightly increased rates on credit cards and home equity lines of credit, but mortgage rates and auto loans aren’t likely to rise much anytime soon.
A second report Thursday said a measure of economic indicators increased in November, buoyed by more home construction permits and higher stock prices.
The Conference Board’s index of U.S. leading economic indicators — a measure of the economic outlook for the next three to six months — rose 0.4 percent after climbing 0.6 percent in October, the New York-based research group said Thursday.
Five of the 10 indicators of the composite gauge advanced. “Although the six-month growth rate of the LEI has moderated, the economic outlook for the final quarter of the year and into the new year remains positive,” Ataman Ozyildirim, director of Business Cycles and Growth Research at the Conference Board, said in a statement.
Economists’ estimates in the Bloomberg survey ranged from no change to a 0.5 percent advance. Information for this article was contributed by Christopher S. Rugaber of The Associated Press and Victoria Stilwell of Bloomberg News.
