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Economy in Brief

Goods Trade Deficit Narrows in December
by Sandy Batten  January 28, 2021

• Narrowing larger than expected.

• Still, net exports were a meaningful drag on overall GDP growth in Q4.

• Export growth picked up while import growth slowed in December.

The advance estimate of the U.S. trade deficit in goods narrowed to $82.5 billion in December from $85.5 billion in November. The Action Economics Forecast Survey expected an $83.5 billion deficit. Exports jumped up 4.6% m/m (-2.0% y/y) on top of an upwardly revised 1.0% m/m gain in November. Imports rose 1.4% m/m (+6.5% y/y) in December, a slowdown from the upwardly revised 3.1% m/m gain in November. For all of 2020, the goods trade deficit widened to a record $897.2 billion from $854.4 billion in 2019.

Today's release was less noteworthy than usual as the advance report of 2020 Q4 GDP was also released, and this contained trade figures for the entire quarter. Even with the narrowing of the goods deficit in December, net exports were a meaningful drag on overall Q4 GDP growth as the widening deficit for the entire fourth quarter subtracted 1.5%-points.

The jump in exports in December reflected a 10.4% m/m surge in exports of food, feeds and beverages and a 6.8% m/m gain in exports of automotive vehicles. The slowdown in imports was led by a 3.3% m/m decline in imports of foods, feeds and beverages and a 3.2% m/m drop in imports of consumer goods. By contrast, imports of industrial supplies jumped up 6.6% m/m and automotive vehicle imports rose 6.2% m/m in December.

The advance international trade data can be found in Haver's USECON database. The expectation figure is from the Action Economics Forecast Survey, which is in AS1REPNA.

Advance U.S. Foreign Trade in Goods (Customs Value $) Dec Nov Oct Dec Y/Y 2019 2018 2017
U.S. Trade Deficit ($ bil.) -82.47 -85.49 -80.36 -69.24
-897.16 -854.37 -872.04
Exports (% Chg) 4.6 1.0 3.0 -2.0 -12.7 -1.4 7.7
Imports (% Chg) 1.4 3.1 2.3 6.5 -6.7 -1.6 8.5

Note: Current month is based on Advance Trade data; Previous months reflect revised data from International Trade release.

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