WASHINGTON (Reuters) - The trade deficit jumped in November to its highest level in 14 months as surging oil prices overpowered a ninth consecutive month of record exports, the Commerce Department said on Friday.
The trade gap widened 9.3 percent to $63.1 billion, the largest month-to-month gain in more than two years.
The trade data added to pessimism about the U.S. economy, which many analysts believe is teetering on the edge of recession because of a severe housing market downturn.
"It's negative for fourth-quarter GDP, pushing us back below the 1 percent level," David Wyss, chief economist at Standard and Poor's Rating Services in New York.
Federal Reserve Chairman Ben Bernanke on Thursday all but guaranteed the Fed would cut interest rates later this month, saying it stood ready to take "substantive additional action to support growth."
The wider-than-expected deficit dragged the dollar lower against the yen, although traders remained focused on developments in the financial sector.
U.S. stocks fell on fears that mounting credit card defaults at companies such as American Express Co (AXP.N) herald a slowdown in consumer spending, increasing the likelihood of recession.
OIL DRIVES DEFICIT HIGHER
Average prices for imported oil surged nearly 10 percent to a record $79.65 per barrel in November, lifting petroleum imports to a record $34.4 billion.
Oil prices were up nearly 53 percent from November 2006.
A Labor Department report on Friday showed petroleum import prices dropped 0.6 percent in December, their first decline since August. However, oil prices topped $100 per barrel last week, a sign of future pressure on the trade gap.
Although total imports of goods and services increased 3 percent in November to a record $205.4 billion, oil prices were mostly to blame for the spike in the deficit, U.S. Commerce Secretary Carlos Gutierrez said in an interview.
"It took us off the trend we were on," he said, acknowledging trade may not contribute as much to fourth-quarter U.S. economic growth as it has in previous quarters.
"That's another reason we need to open up more markets," Gutierrez said, making a pitch for congressional approval of free trade pacts with Colombia, South Korea and Panama.
Despite worse-than-expected December retail sales, Gutierrez said he remained hopeful December figures would show overall consumer spending remained strong.
"We're still expecting consumer spending to add to GDP growth in the fourth quarter," he said.
SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard Worldwide (MA.N), said on Friday retail sales were flat in December despite hefty discounts and other incentives to entice shoppers to spend more on the holidays.
'FAILED TRADE POLICY'
Sen. Sherrod Brown, an Ohio Democrat, said the data made a more compelling case for legislation to combat China's "currency manipulation" and to help retrain workers who have lost their jobs because of imports or factories moving overseas.
"From failed trade policy to a weak dollar to dependence on foreign oil, today's report underscores just how abysmal current economic policies have been for middle class families," he said.
Imports from China slipped in November from the record set in October. But the year-to-date deficit with China totaled $237.5 billion through the end of the 11th month -- topping the annual record of $232.6 billion set in 2006.
U.S. exports of goods and services hit a record $142.3 billion in November, but grew only 0.4 percent compared with about 1 percent in the prior two months -- suggesting a slowdown in foreign demand for U.S. goods despite the cheap dollar.
"Four-tenths of an increase is not a wonderful number," said Oscar Gonzalez, an economist at John Hancock Financial Services In Boston. "But I think going forward, we are going to see more on the order of 1 percent growth."
Strong exports have helped prop up the U.S. economy as the housing sector has sagged. Exports rose more than 12 percent in the first 11 months of 2007, while imports increased only 5.6 percent.
The trade gap through the end of November totaled $650 billion, compared with $698 billion in the same period in 2006.
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