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Economy in Brief

U.S. Trade Deficit Narrows Slightly But Petroleum Imports Drop Sharply
by Tom Moeller October 9, 2009

Though oil prices have risen, the recession in the U.S. economy has prompted a sharp cutback in the dollar amount of oil imports. That cutback helped the international trade deficit to narrow during August to $30.7.0B versus a little-revised July deficit of $31.9B. Consensus expectations had been for a deeper August deficit of $33.0B.

During August, oil imports were cutback by 5.7% m/m and have declined by more than one-half y/y due to lower prices. Moreover, the recession part of the story was clear: Imports of petroleum products in constant dollar terms fell 10.4% and were down 13.8% y/y. The decline in petroleum imports occurred despite higher crude oil prices. Prices rose to an August average of $64.75 per barrel versus the February low of $39.22.

The recession's influence also was apparent in nonoil imports which ticked lower by 0.1% but were down by 19.7% y/y. Real non-auto consumer goods imports fell by 1.9% (-16.3% y/y). Non-auto capital goods imports slipped 0.3% after a strong July gain and that left them off 19.9% from last year. Real automotive vehicles & parts imports, however, were strong for the third strait month. They rose 8.4% but they still were off by one-quarter from last year.

Reflecting the competitive value of the dollar, real merchandise exports fell during August just 1.5% following three months of increase. Nevertheless, recessions abroad lowered real exports by 19.5% y/y. The chained dollar value of real capital goods exports led the August decline with a 4.2% drop (-23.9% y/y. Non-auto consumer goods exports fell a lesser 1.4% (-11.4% y/y) while auto exports rose for the third strait month (-28.9% y/y).

Imports of services fell 15.4% y/y as travel imports were off 7.8%, i.e., fewer U.S. residents went abroad, and passenger fares were off 24.7%. Exports of services fell 11.8% as travel exports fell 20.3% y/y and passenger fares fell by one-quarter.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

Monetary Policy Research and the Financial Crisis: Strengths and Shortcomings is today's speech by Fed Vice Chairman Donald L. Kohn and it is available here.

In the Wake of the Crisis is yesterday's speech by Fed Governor Daniel K. Tarullo and it can be found here

Foreign Trade  August July Y/Y 2008 2007 2006
U.S. Trade Deficit $30.7B $31.9B $60.9B (8/08) $695.9 $701.4 $760.4
 Exports - Goods & Services 0.2% 2.5% -20.7% 11.2% 13.2% 13.3%
 Imports - Goods & Services -0.6% 4.9% -28.6% 7.6 6.0% 10.8%
  Petroleum -5.7% 3.3% -51.9% 37.0% 9.4% 20.1%
  Nonpetroleum Goods 0.3% 6.4% -24.6% 1.5% 4.8% 9.1%
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