Trade deficit dips at end of 2012

By Peter Schroeder - 02/08/13 10:45 AM ET

The U.S. trade deficit shrank to $38.5 billion in December as a strong boost in petroleum exports gave the economy a kick at the end of 2012.

Coupled with an increase in the amount of oil shipped out by the U.S. was a drop in the import of the same. Petroleum imports fell to their lowest level in over 15 years.

December's figures came in roughly 21 percent lower than the November deficit of $48.6 billion, the Commerce Department reported.

Compared to December 2011, the trade deficit dropped $13.2 billion as exports climbed 4.9 percent and imports dropped 2 percent.

Rebecca Blank, the U.S. deputy secretary of Commerce, hailed the new figures as evidence the administration's trade efforts were working.

The administration’s efforts to promote U.S. exports are paying off, with export levels reaching a record $2.2 trillion in 2012,” she said in a statement. “We’re continuing to make historic progress toward the President’s goal of doubling exports.

The shrinking deficit renews optimism about the nation's economy at the end of 2012, following a disappointing gross domestic product report. The Commerce Department surprised analysts when it released its initial estimate of the nation's GDP in the fourth quarter of 2012, finding that the economy actually shrank by 0.1 percent, driven primarily by steep declines in federal and defense spending. But the solid trade deficit numbers encourage hopes that future revisions to that number could show the economy continuing to expand.

Friday's report also put a cap on the year's trade figures. Through all of 2012, the deficit in goods and services dropped roughly $19 billion, from $559.9 billion in 2011 to $540.4 billion in 2012.

But the Alliance for American Manufacturing (AAM) highlighted that 2012 saw the U.S.'s trade deficit with China reach record levels, as the goods deficit jumped from $295 billion to $315 billion.

“If Washington spent as much time worrying about the trade deficit as it did the budget deficit, our unemployment rate would be a lot lower than it is right now," AAM President Scott Paul said in a statement on the alliance's website.

"The record trade deficit with China will not disappear on its own. Congress and the Administration must take on currency manipulation and monetary policy, as well as China's persistent cheating on its trade obligations and our own economic policy, which still favors outsourcing over insourcing.”