Could US growth be heading for negative territory? If it did then all the predictions of this year would be confounded, but some analysts now fear that this is precisely what may happen, thanks to a sharp rise in the US balance of trade deficit.

We can think of only one phrase to describe the latest US Balance of Payments figures, “Oh Dear.”

In October, the US trade deficit hit a new record high of $68.9bn from $66.0bn the previous month.

And analysts had expected an improvement. Last month, the poor figures were put down to the strike at Boeing; but with this at an end, production back on track. Aircraft exports surged 173%, the pundits were betting on an improvement. Instead, thanks to a massive surge in petroleum imports, 304bn barrels worth £26.1bn were imported, compared to 278bn barrels in September, things just got worse.

In total crude oil imports surged $3bn, and that was despite a fall in the price of oil in the month.

Capital Economics said of the figures: “If the real trade deficit were to remain at the same level for the remaining two months of the current quarter, we calculate that net external trade would reduce overall GDP growth by roughly 1.5% annualised.” The respected economic think tank added, “Admittedly, the real trade deficit is more likely to fall back over the remainder of the quarter and consumption growth may well turn out to be even stronger with gasoline prices falling, but a decline in GDP is now a serious possibility.”

© Investment & Business News 2013