The trade gap widened today with exports down more than imports. Since exports add to GDP and imports subtract, the net effect of today’s international report will be a reduction in expected GDP for the first quarter of 2016.
In a report pointing to economic weakness, the nation’s trade gap in goods widened 1.2 percent in January to $62.2 billion as exports fell 2.9 percent to offset a 1.5 percent fall in imports (imports are a subtraction in the national accounts). Exports fell across the board including industrial supplies at minus 3.0 percent in the month and capital goods down 2.3 percent. The decline in imports included a steep 6.8 percent drop in industrial supplies and a 2.4 percent decline for capital goods. The declines in industrial supplies are tied in part to low prices for oil and petroleum products while the declines in capital goods points to lack of global confidence in the business climate and lack of business investment in global productivity. This report represents the goods portion of the monthly international trade report which will be posted next Friday.
The international trade in goods is expected to narrow slightly in January to an advance reading of $61.0 billion. Imports of goods have been steady with gains for autos offsetting declines for consumer goods. But goods exports have been clearly weak, especially for capital goods in a trend that points to lack of confidence in the outlook among foreign businesses and lack of investment in global productivity.
The Census Bureau is now publishing an advance report on U.S. international trade in goods. The BEA will incorporate these data into its estimates of exports and imports for the advance GDP estimates. This is expected to reduce the size of revisions to GDP growth in the second estimates.
That revision expectation certainly did not pan out. For details, please see 4th Quarter GDP Revised Up on Unwanted Buildup of Inventories.
Mike “Mish” Shedlock
Tony Bennett said:
“Exports fell across the board”
King Dollar putting a hurting on S&P profits/capex/employment.
Saw the other day where Halliburton canning 5000 people … get used to seeing these notices hitting the wire.
iam thinking there is about to be some perverse kind of shock on nthe size of the fiscal deficit – having held stable at c.$500B for the last five years, it could ballon back to 70-80B a month (delayed dollar strength v euro/EM currencies and chinese devaluation impact?).
since the fiscal deficit is an accounting identity )fiscal deficit is reverse of trade deficit) the incoming president will be faced with a fiscal deficit of aroun $1T again and we will be back to a rapidly rising debt to gdp ratio..
the amount of debt outstanding has just broken $19T with no acknowledgement
John S said:
I’m the guy who mentioned Gary Johnson to you a few years ago…..looks like I’m voting for him again now that Paul had dropped out.
Before I retired I used to complete a lot of information forms required by the census bureau and if I am an example of how accurate they are I would not rely on them.
The reports were for everything from employment data and capital expenditures to software purchases and costs.
Although they are to be based on books and records, “reasonable estimates” are acceptable. I used “reasonable estimates” because the time and effort required to determine actual figures would have taken up much of my time as CFO of a national property management company.
Thank you, I rely on your posts…….