Some Good News Buried in Bad December Trade Deficit

http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

The foreign trade division of the Census Bureau released the December trade figures this morning.  Defying analyst expectations for a small decline in the trade deficit, it soared by over 10% from $36.4 billion in November to $40.2 billion in December.  A $4.6 billion rise in exports was swamped by an $8.4 billion rise in imports.  The goods deficit rose by $3.4 billion while the services surplus shrank by $0.4 billion.

Petroleum products accounted for all of the increase in the goods deficit and then some, with the petroleum deficit rising by $3.6 billion.   The trade deficit in the following categories of goods also worsened by the amount indicated:

  • Food, feed and beverages:  -$0.5 billion
  • Vehicles & parts:  -$0.7 billion

The trade deficit in the following categories of goods improved by the amount indicated:

  • Industrial supplies, except petroleum:  +$0.9 billion
  • Consumer goods:  +$0.3 billion
  • Capital goods (industrial machinery & equipment):  +$0.2 billion
  • Other goods:  +$0.03 billion

So, aside from petroleum products, the overall balance of trade in goods improved by $0.2 billion. 

The following is a chart of the trade data:

U.S. Trade Deficit

The following is a chart of the trade data as a percentage of real per capita GDP:

Trade Deficit as % of Real PC GDP

As you can see, although the overall trade deficit is getting worse, thanks largely to oil, the trade deficit in non-petroleum goods actually improved slightly in December, with a rise in exports slightly out-pacing a rise in imports.  This is a glimmer of good news, but it’s too early to read much into it. 

The trade deficit with the following selected nations worsened by the indicated amount:

  • Canada:  -$1.5 billion
  • Venezuela:  -$0.5 billion
  • Ireland:  -$0.5 billion
  • Nigeria:  -$0.1 billion
  • Mexico:  -$0.1 billion

The worsening in the deficit in all of the above except Ireland can be attributed to oil.

The trade deficit with the following selected nations improved as indicated:

  • China:  +$2.1 billion
  • Japan:  +$0.8 billion
  • Saudi Arabia:  +$0.5 billion
  • Germany:  +$0.3 billion
  • South Korea:  +$0.1 billion

This is very good news because, with the exception of Saudi Arabia, the above countries have accounted for the worst of our trade deficit in non-petroleum goods.  Is it possible that the rest of the world is actually making an effort at cutting their reliance on exports to the U.S.?  I’m skeptical.  One month does not a trend make.  But it’s a step in the right direction.  Time will tell.

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6 Responses to Some Good News Buried in Bad December Trade Deficit

  1. Mark A. Hall says:

    Pete,

    Some of the numbers look almost to good to be true.

    SOUTH KOREA:

    December 2008 U.S. Exports = $1,813.9 million
    December 2009 U.S. Exports = $2,813.9 Million (+51.2%)

    December 2008 U.S. Imports = $3,285.2 million
    December 2009 U.S. Imports = $3,390.5 million (+3.2%)

    CHINA:

    December 2008 U.S. Exports = $5,110.7 million
    December 2009 U.S. Exports = $8,362.9 Million (+63.6%)

    December 2008 U.S. Imports = $25,079.5 million
    December 2009 U.S. Imports = $26,501.0 million (+5.7%)

    TAIWAN:

    December 2008 U.S. Exports = $1,288.2 million
    December 2009 U.S. Exports = $1,986.6 million (+54.2%)

    December 2008 U.S. Imports = $2,544.5 million
    December 2009 U.S. Imports = $2,649.3 million (+4.1%)

    INDONESIA:

    December 2008 U.S. Exports = $347.7 million
    December 2009 U.S. Exports = $809.7 million (+132.9%)

    December 2008 U.S. Imports = $1,195.1 million
    December 2009 U.S. Imports = $1,148.2 million (-3.9%)

    VIETNAM:

    December 2008 U.S. Exports = $154.9 million
    December 2009 U.S. Exports = $318.7 million (+105.7%)

    December 2008 U.S. Imports = $1,177.2 million
    December 2009 U.S. Imports = $1,069.1 million (-9.2%)

    THAILAND:

    December 2008 U.S. Exports = $547.5 million
    December 2009 U.S. Exports = $690.6 million (+26.1%)

    December 2008 U.S. Imports = $1,721.5 million
    December 2009 U.S. Imports = $1,897.8 million (+10.2%)

    INDIA:

    December 2008 U.S. Exports = $1,023.0 million
    December 2009 U.S. Exports = $1,418.7 million (+38.7%)

    December 2008 U.S. Imports = $1,847.4 million
    December 2009 U.S. Imports = $1,785.7 million (-3.3%)

    * Information obtained from U.S. Census Bureau website

    Thank You,

    Mark A. Hall

  2. mtnmike says:

    I don’t want to be a fly in the ointment here, but isn’t it difficult to sell goods to a nation that is in deep recession? One where 27 Million people are affected in some degree of unemployment?

    I’m with you Pete, I hope this is a long standing trend, but without employment, I don’t see a light at the end of the tunnel.

  3. Mark Hall says:

    It just seems strange that these countries are buying a much greater percentage from us now (December) than they did a year ago.

    Is the information correct?

    Are they replenishing their supplies?

    If so, Could our January & February trade numbers then be horrible?

  4. Mark Hall says:

    The monthly 1 digit commodity import/export groupings by country are usually available on the same day as trade numbers are released.

    Since as of today this has not yet been updated, could some juggling & plugging of numbers be involved?

    Just a thought.

  5. Pete Murphy says:

    A couple of thoughts:

    1. The slowdown in imports in December may be due to a slowdown in pre-holiday inventory building.
    2. The improvement in “industrial supplies” and “capital goods” may signal a building of more manufacturing capacity overseas, perhaps a bad omen for a future wave of more imports.

    Again, only time will tell.

  6. Mark Hall says:

    I agree Pete

    Probably a build up of equipment & supplies to start up facilities for additional American companies that are now outsourcing overseas to reduce costs.

    When will it ever end?

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