U.S. trade deficit narrows 2% to $63.2 billion. GDP may get a lift.

By contrast, record deficits in 2021 and 2002 acted as a big drag on GDP.

Key details: Imports fell 1.9% in November to $316.9 billion, the government said Tuesday.

Imports remain well below their 2022 peak due to a shift in spending by U.S. consumers from goods to services such as leisure and recreation. Imports of goods fell even more steeply in November.

In what could be a more worrisome sign, declining imports might mean consumers are cutting back. Whenever that happens, the economy slows. Consumer spending drives about 70% of U.S. economic activity.

U.S. exports also fell 1.9% in November to a $253.7 billion. Yet they are still near an all-time high, despite widespread economic weakness in foreign economies.

The U.S. trade deficit averaged $62.9 billion from September to November, down almost 12% from $71.3 billion in the same three-month period of 2022.

Big picture: The trade deficit probably won’t exert much, if any, negative influence on fourth-quarter GDP. The economy likely grew at as fast as a 2.5% annual pace, the most recent forecasts show.

The outlook for trade in 2024 is uncertain. The U.S. economy has avoided a recession, but growth has slowed, and most foreign economies are doing even worse.

Looking ahead: “Although consumption remained a driving force of the U.S. economy at the end of 2023, this large decline in imports of consumer goods could be a signal that consumer spending may have started to weaken at the end of last year,” Raymond James chief economist Eugenio Aleman said.

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.35%
and S&P 500
SPX,
+1.07%
were set to open lower in Tuesday trading.