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Economy in Brief

U.S. Trade Deficit Deteriorates Due To Higher Oil Prices
by Tom Moeller  February 11, 2011

The U.S. foreign trade deficit deepened during December to $40.6B versus a little-revised $38.3B in November $38.3B. Consensus expectations had been for $40.0B. For the full year, the deficit deepened to $497.8B. Exports gained 1.8% in December (13.7% y/y) following the 1.0% November increase. Imports rose 2.6% (12.8% y/y) with the rise in oil prices. In chained 2005 dollars, the deficit in goods deteriorated to $555.3B for the full-year from $486.6B as exports rose 14.7% and imports rose 14.5% y/y.

Nominal exports of autos & parts were strongest last month posting a 6.2% rise (9.9% y/y) followed by nonauto capital goods with a 3.8% increase (13.0% y/y). Nonauto consumer goods exports fell 2.0% (+11.2% y/y) while exports of foods, feeds & beverages slipped 0.4% (+18.5% y/y). Nominal imports of goods jumped another 3.1% as higher prices lifted oil imports by 16.8% (18.0% y/y). The per barrel cost of imported crude oil was $79.78 versus $76.81 in November. Imports of "other" goods also were firm posting a 6.6% gain (6.3% y/y). Foods, feed & beverages imports were strong with a 2.4% increase (16.1% y/y). Elsewhere there was m/m weakness. Capital goods imports fell 1.2% but they rose 17.6% during the past 12 months. Imports of nonauto consumer goods imports also fell 1.0% but were up 10.0% y/y with the improving U.S. economy.

Services exports were essentially unchanged (+6.1% y/y) but travel exports fell 1.3% (+10.0% y/y). Passenger fares also fell but were up 21.9% from last December. Imports of services also slipped marginally (+5.2% y/y). Travel imports fell slipped m/m  (+4.1% y/y) and passenger fares also slipped (+8.2% y/y).

By country and for the full year, the goods trade deficit with China deteriorated to $273.1B as exports rose one-third but imports rose by a lesser one-quarter. (In dollar terms, U.S. imports from China are roughly four times exports.) The trade deficit with Japan also deteriorated to $59.8B as exports rose 18.4% and imports rose 25.6%. (Again, imports from Japan are roughly twice the level of U.S. exports.) The trade deficit with the European Union deteriorated to $8.0B as U.S. exports grew 8.7% y/y and imports rose 13.4%. (Imports from Europe are one-third larger than U.S. exports.)

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

Uncertainty Lies Ahead For The World Economy from the Federal Reserve Bank of Atlanta can be found here

Foreign Trade Dec Nov Oct Y/Y 2010 2009 2008
U.S. Trade Deficit $40.6B $38.3B $38.3B $37.1B
$497.8B $374.9B $698.8B
Exports-Goods & Services (m/m) 1.8% 1.0% 3.0% 13.7% 16.6% -14.6% 11.5%
Imports-Goods & Services 2.6 0.8 -0.8 12.8 19.7 -23.3 8.0
  Petroleum 16.8 6.9 -7.4 13.0 32.4 -44.0 37.0
  Nonpetroleum 0.3 0.0 0.2 14.4 20.7 -20.9 1.5
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