US Trade Gap Widens to $56 Billion in November

Summary

Michael McKee reviews US economic data, noting little change in initial jobless claims, unchanged third-quarter productivity and unit labor costs, and a sharply wider November trade deficit. He says the trade gap will likely weigh on the Atlanta Fed GDPNow estimate, while underlying demand is still relatively strong but consumer sentiment has weakened.

• Initial jobless claims rose but remained very low; recent layoffs may not appear until severance ends.
• Third-quarter productivity was unchanged at 4.9% and unit labor costs were -1.9%.
• The November trade deficit widened to $56.8 billion as imports rose 5% and exports fell 3.6%.
• McKee said the trade data will subtract from GDPNow and may push the estimate below 5%.
• Underlying demand is relatively strong but has slowed, with focus on fourth-quarter spending data.
• Consumer sentiment has collapsed amid worries about jobs and income, potentially weighing on spending.