The Commerce Department reports on the U.S. trade deficit for December. The report will be released Thursday at 8:30 a.m. Eastern.
SMALLER GAP: The expectation is that the trade deficit narrowed slightly to $38 billion in December, according to a survey of economists by data firm FactSet.
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EXPORTS AND IMPORTS: In November, the trade deficit fell to $39 billion, the lowest level in almost a year thanks to the country's swiftly shrinking foreign oil bill.
A big decline in the price of oil has helped trim the overall deficit even though U.S. exports have fallen, a reflection of global economic weakness and the rising value of the dollar. A stronger dollar makes U.S. products more expensive in overseas markets and foreign goods cheaper for U.S. consumers.
While economists believe lower oil prices will help the trade picture in 2015 as well, they are still forecasting the deficit will widen a bit as faster growth in the United States attracts more imports while U.S. exporters continue to struggle with the impact of weaker growth overseas and a stronger dollar.
The overall economy grew at a moderate 2.6 percent rate in the final three months of 2014 after turning in a sizzling 5 percent growth rate in the July-September period. Part of the slowdown reflected a swing in trade, which boosted growth by 0.8 percentage point in the third quarter but reduced growth by 1 percentage point in the fourth quarter.
For the whole year, trade was a small negative, trimming growth by 0.2 percentage point. The economy grew 2.4 percent in 2014 and many economists believe growth in 2015 will be slightly above 3 percent, giving the country the best growth in a decade.
The politically sensitive deficit with China, the largest imbalance the United States has with any country, was on track for a record in 2014.
That's created pressure on Congress and the Obama administration to take tougher actions against what critics see as China's unfair trade practices. U.S. manufacturers contend that China is manipulating its currency to keep it artificially low against the dollar as a way to make American products more expensive in China's market and Chinese products cheaper in the United States.
The widening trade deficit comes at a time when the administration is hoping to finally get Congress to approve the fast-track authority it needs to wrap up a major 12-nation trade agreement with Pacific Rim countries known as the Trans-Pacific Partnership.
The administration sees the trade deal as one of the areas where he may be able to find common ground with Republicans, who now for the first time in his presidency control both houses of Congress.