U.S. trade deficit jumps to $124.1 billion at close of 2011

A slight drop in exports and a rise in imports widened the broadest measure of the U.S. trade deficit at the end of last year. The increase pushed the gap to its widest point in three years. In a report out this morning, the Commerce Department says the current account trade deficit increased 15.3% in the October-through-December quarter, to $124.1 billion. A higher trade deficit acts as a drag on growth; it means more goods and services are being purchased from overseas, while U.S. companies are making fewer sales overseas. Exports decreased slightly to $380.4 billion, in part because of a drop in overseas demand for U.S. airline tickets. Imports ticked up to $566.7 billion, partly driven by increased purchases of imported airplanes. For the year, the current account deficit rose 0.6% to $473.4 billion, the largest imbalance since 2008. Economists think the deficit will keep rising in 2012. Europe’s debt crisis is likely to drag on U.S. exports, as is slower growth in Asia. And stronger growth in the United States should boosts imports. The January deficit for U.S. trade in goods and services increased to $52.6 billion, the largest monthly imbalance in more than three years. The Associated Press has the full story here.