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Economy in Brief

U.S. Trade Deficit Widened
by Tom Moeller March 11, 2008

During January the U.S. foreign trade deficit widened to $58.2B from a revised $57.9B in December, which was shallower than initially reported. Consensus expectations had been for a deficit of $59.6B.

Lifted by the weaker dollar, U.S. exports during January again were strong. They posted a 1.6% jump following the unrevised 1.5% December gain. Exports of goods rose 1.3% (15.2% y/y) as exports of foods, feeds & beverages surged. A 7.6% m/m jump in food exports lifted the y/y rise to 42.0%. Exports of industrial supplies & materials also were quite strong and jumped 2.8% (25.1% y/y). Exports of capital goods have wobbled during the last several months and fell 1.3% (+7.6% y/y) during January. Weaker exports of civilian aircraft accounted for most of that wobble, declining 12.6% (+10.8% y/y). Exports of computers rose 5.2% (6.3% y/y) while exports of nonauto consumer goods were again strong and rose 3.8% (12.9 y/y).

U.S. exports of services in January jumped 1.8% (18.2% y/y). Travel exports rose 26.0% y/y and passenger fares were up 27.6%.

Overall imports fully reversed the December decline and rose 1.3%. Higher oil prices raised nominal petroleum imports by 10.6%. Petroleum imports in constant dollars, however, rose a lesser 8.8% m/m and in fact fell 1.6% during the last twelve months. In constant dollars, imports of nonauto consumer goods reflected the weaker U.S. economy and fell 4.6% (-0.8% y/y) while real capital goods imports fell 0.4% (+2.4% y/y).

The U.S. trade deficit in goods with China deepened m/m to $20.3B but that remained well below last year's monthly record of $25.9B. Growth in imports from China has slowed to 2.1% during the last twelve months after growth between 10% and 30% during the last several years. Exports to China for January showed a 15.1% decline but that followed huge gains during the past several years, also between 10% and 30%.

G-10 central banks announced measures and will consult regularly on liquidity pressures in funding markets. The statement by the Federal Reserve can be found here

Foreign Trade  January December Y/Y 2007 2006 2005
U.S. Trade Deficit $58.2B $57.9B $57.4B
$708.5 $758.5 $714.4B
Exports - Goods & Services 1.6% 1.5% 16.6% 12.6% 12.7% 10.9%
Imports - Goods & Services 1.3% -1.2% 11.9% 6.0% 10.4% 12.9%
  Petroleum 10.6% 3.6% 59.0% 9.5% 20.1% 39.6%
  Nonpetroleum Goods -1.1% -2.9% 2.5% 4.6% 9.1% 10.3%
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