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Economy in Brief

U.S. 2005 Trade Deficit Another Record Paced by Oil & China
by Tom Moeller February 10, 2006

At $725.8B the U.S. foreign trade deficit set another record last year, up from the prior record of $617.6B in 2004. The year was capped by a December deficit in goods & services trade of $65.7B versus the November deficit that was revised slightly deeper from the initial estimate. Consensus expectations had for a $65.0B deficit during December.

The $229.2B petroleum deficit last year was $65.8B deeper than during 2004 and accounted for 62% of the deepening in the 2005 total foreign trade deficit. Crude oil's per barrel price rose to an average $46.90 (36.2%) and the per day volume of all petroleum imports rose 1.7%. In December, crude oil prices averaged $49.76, down from the monthly high of $57.32 during September.

With China the US trade deficit improved for the second consecutive month, to $16.3B, but averaged $201.6B for the full year versus $161.9B in 2004. The $39.7B y/y deepening accounted for another 34% of last year's worsening of the total US trade deficit. The US trade deficit with Japan improved again in December to $6.8B ($82.7B in 2005) as did the monthly trade deficit with the Asian NICs to $1.1B ($15.9B in 2005). The deficit with the European Union also improved $10.1B ($122.4B in 2005) during December.

Imports of nonpetroleum products rose 10.1% during all of last year, capped by a 3.5% rise in December. Imports of nonauto consumer goods rose 5.3% during December, 9.1% for the full year, while December capital goods imports rose 2.5% and 10.5% during 2005. Imports of advanced technology products slipped modestly in December following no change in November (NSA) but rose 9.1% for the full year after a 15.1% rise during 2004.

Total exports rose strongly for the fourth month in the last five and the 2.1% December increase finished a year of 10.4% growth. December's gain was led by a 6.4% (12.1% y/y) jump in exports of nonauto consumer goods and a 4.7% (9.5% y/y) rise in autos. Capital goods rose 0.7% after a 3.8% November surge and pulled the 2005 average up 9.2%. Exports of advanced technology products jumped 7.5% (NSA) during December and 7.0% for the full year.

The Economic Outlook by Michael H. Moskow, President & CEO of the Federal Reserve Bank of Chicago, can be found here.

Foreign Trade Dec Nov Y/Y 2005 2004 2003
Trade Deficit $65.7B $64.7B $54.7B (12/04) $725.8B $617.6B $494.8B
  Exports - Goods & Services 2.1% 1.8% 9.6% 10.4% 12.6% 4.6%
  Imports - Goods & Services 1.9% -0.7% 13.3% 12.9% 16.6% 8.5%
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