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Economy in Brief

U.S. Trade Deficit Deepened in August
by Tom Moeller October 14, 2004

In August, the U.S. foreign trade deficit deepened to $54.0B, the second highest level on record. Prior months' figures were little revised. Consensus expectations had been for a somewhat shallower deficit of $51.0B.

Total exports grew just 0.1%, held back by a 0.1% (+15.7% y/y) decline in goods exports which followed a 4.3% pop in July. The m/m decline in goods exports spread from a 4.5% (-5.3% y/y) drop in foods & beverages to a 2.2% (+19.8%) fall in industrial supplies and a 2.0% (+3.5%) drop in the "other" category.

Capital goods exports ticked up 0.2% (+15.4% y/y) following a 5.2% jump in July while nonauto consumer goods exports rose by 4.1% (15.0% y/y), the first m/m increase following four months of decline. Auto exports also rose a strong 3.1% (22.7% y/y).

A 13.5% m/m (36.7% y/y) rise in the value of petroleum imports drove total imports 2.5% higher in August. Most of that gain reflects higher crude oil prices which are up 32.0% y/y, but the quantity of petroleum product imports did rise 5.3% (8.0% y/y). Imports of non-petroleum goods rose 0.4% (15.7% y/y) following a 0.4% decline in July.

The US trade deficit with China deepened to another record of $15.4.0B ($124.1B in 2003). Year over year, the gain in exports to China (31.8%) and imports from China (31.3% y/y) was roughly equal. The US trade deficit with Japan eased to $6.44B ($66.0B in 2003) as did the deficit with the European Union which eased to $9.6B ($27.9B in 2003).

"Free Trade: Why Are Economists and Noneconomists So Far Apart?" from the Federal Reserve Bank of St. Louis is available here.

"Offshoring in the Service Sector: Economic Impact and Policy Issues" from the Federal Reserve Bank of Kansas City can be found here.

Foreign Trade Aug July Y/Y 2003 2002 2001
Trade Deficit $54.0B $50.5B $40.2B(8/03) $496.5B $421.7B $362.7B
  Exports - Goods & Services 0.1% 3.0% 14.2% 4.6% -3.1% -6.0%
  Imports - Goods & Services 2.5% -1.1% 20.7% 8.5% 2.1% -5.5%
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