U.S. Trade Deficit Hits Lowest Level in Over 5 Years

The U.S. trade deficit dropped to $52.8 billion in September, its lowest in over five years, as exports surged and imports rose slightly. This narrowing could contribute positively to Q3 economic growth. Despite earlier economic disruptions, GDP is predicted to have increased by 3.5% this quarter.

The United States experienced an unexpected narrowing of its trade deficit in September, which reached its lowest point in more than five years. This improvement came as exports saw significant growth while imports experienced only a slight increase, signaling a potential positive impact on the nation's economic growth during the third quarter. According to data released by the Commerce Department's Bureau of Economic Analysis and Census Bureau, the trade gap contracted by 10.9% to $52.8 billion, its smallest since June 2020.

Initially, economists had predicted an increase in the trade deficit to $63.3 billion. The release of this report was postponed due to a prolonged 43-day government shutdown. In September, exports climbed by 3.0% to $289.3 billion, with notable gains in goods exports, which surged by 4.9% to $187.6 billion, hitting a record high in consumer goods shipments.

Imports, meanwhile, rose by 0.6% to $342.1 billion, correlating with a similar 0.6% increase in goods imports to $266.6 billion. The trade in goods deficit reduced by 8.2% to $79.0 billion, reaching its lowest level since September 2020. Analysts suggest that President Trump's protectionist policies, characterized by extensive tariffs, have significantly impacted the trade balance. Amidst these developments, the Atlanta Federal Reserve forecasts a 3.5% annualized GDP growth rate for the third quarter, with official estimates due for release on December 23.

(With inputs from agencies.)