Trade deficit widens in December to six-month high

The trade deficit expanded in December to its widest margin since June. 

The Commerce Department reported Friday a $48.8 billion trade imbalance, up from a revised $47.1 billion in November, an increase of 3.7 percent, as import growth outpaced exports. 

For the final month of last year, imports totaled $227.6 billion, an increase of $3 billion — or 1.3 percent — over November's figures, as demand increased for foreign cars and machinery.

Meanwhile, exports were $178.8 billion, up 0.7 percent — boosted by a big jump, 7.2 percent, in exports to cash-strapped Europe, after exports there fell 6 percent in November. 

With an expected recession in Europe, economists have forecast that exports from the United States will slow and put a strain on the trade balance. 

Overall, the trade deficit last year was $588 billion, $58 billion above 2010's $500 billion deficit, the highest level since 2008. Exports were $2.1 trillion while imports were $2.66 trillion, each record highs. 

The deficit was 3.7 percent of gross domestic product, up from 3.4 percent in 2010. 

The trade imbalance with China decreased to $23.1 billion from $26.9 billion as imports dropped in December. 

The 2011 deficit of $295.5 billion, up 8.2 percent from 2010's all-time high, sets a new record with one country.

"From an economic point of view, the trade deficit with China shows just how strong the headwinds are against insourcing jobs back to the United States," said Scott Paul, executive director of the Alliance for American Manufacturing. 

Paul, among others, has pushed for Congress and the Obama administration to crack down on China for not allowing its currency to accelerate in value at a faster pace. 

"From a political point of view, the trade deficit with China shows just how little leadership Congress and the president are providing on international economic matters," he said. 

A mix of Democratic and Republican lawmakers have pushed for the House to consider a Senate-passed bill that would punish China for what they say are unfair trade practices that are hampering the recovery of the U.S. labor market. 

"China’s economic policies — subsidies, state-owned enterprises, intellectual property theft, forced technology transfer, currency manipulation — are now the single largest impediment to job growth in America," Paul said. 

Chinese Vice President Xi Jinping will visit Washington next week with talks likely to include China's trade practices, including its undervalued currency.

Business groups have said that lawmakers should tread carefully about insisting on punishments for China for fear of retaliation.