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Economy in Brief

U.S. Trade Deficit Deepened Unexpectedly
by Tom Moeller February 13, 2007

The U.S. foreign trade deficit deepened unexpectedly in December to $61.2B from a little revised $58.1B during November. The figure compared to Consensus expectations for a deficit of $59.6B. For the year, the trade deficit deepened to a record $763.5B.

Total exports rose 0.6% after an upwardly revised 1.1% gain in November. Export of non-auto consumer goods rose 1.2% for the third straight strong increase, and for the year rose 11.7%. Capital goods, however, slipped 0.2% in December though the firm 14.2% for the year benefited from a 16.9% rise in advanced technology goods and a 40.0% surge in complete civilian aircraft exports.

Imports of nonpetroleum products rose 1.6% (6.8% y/y) and for the year rose 9.2%. Capital goods imports slipped 0.7% (+7.6% y/y) and for the year rose 10.4% while imports of nonauto consumer goods jumped 2.0% (13.4% y/y) while posting an 8.8% gain for the year. Imports of advanced technology products fell 7.2% (+7.6% y/y) and for the year gained 12.0%.

The value of petroleum product imports rose 7.6% (-2.3% y/y) as the price of Brent crude oil rose to $62.98 but the quantity of crude oil imports fell 5.1% (-6.6% y/y).

The U.S. trade deficit in goods with China improved m/m to $19.0B but for the year deepened to $232.5B from $201.5B in 2005. The balance of goods trade with the newly industrialized Asian improved to a $1.0 surplus, the first surplus in ten year and for the year the deficit narrowed to $11.8B from $15.8B in 2005).

Disentangling the Wealth Effect: Some International Evidence from the Federal Reserve Bank of San Francisco can be found here.

How Wages Change: Micro Evidence from the International Wage Flexibility Project from the Federal Reserve Bank of New York is available here.

Foreign Trade  December November Y/Y 2006 2005 2004
U.S. Trade Deficit $61.2B $58.1B $64.2B
$763.5 $716.7B $611.3B
Exports - Goods & Services 0.6% 1.1% 11.5% 12.8% 10.7% 13.4%
Imports - Goods & Services 2.1% 0.3% 5.6% 10.5% 13.0% 16.7%
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