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Posts Tagged ‘trade deficit’

On Friday, the Census Bureau told us that the U.S. trade deficit swelled to $52.6 billion in January, from $48.8 billion in December.  Economists were looking for the deficit to widen to $49.0 billion.

Jim O’Neill, Chairman of Goldman Sachs Asset Management, notes that while the figure could be bad news for GDP in the short-run, structural changes in the economy continue to favor this metric shrinking in the long-run.

From his latest Viewpoints:

One piece of not quite so good news yesterday was that of the US trade balance deteriorating above $50 bn in January, the worst for quite sometime, driven by a notable rise in imports. As the GS Economics Group points out, coming so early in the quarter, this implies a negative external contribution to GDP for the quarter unless there is a big improvement in the next 2 months. Many structural bears will pounce on this release and suggest that, big picture, nothing has really changed, and as any domestic recovery continues, in line with it so will the weak US personal savings rate and its persistent external deficit. The only problem with this argument is that it isn’t really supported by much else. The whole story of the domestic US energy supply story suggests that, at least for the oil trade balance, there is a major fundamental change just starting. In addition, as I repeatedly have discussed in recent weeks, there are lots of growing anecdotes of US and other multinationals talking about moving production back to the US from overseas, so I am dubious about renewed trend deterioration.

SEE ALSO: Goldman’s Jim O’Neill Presents His 11 Predictions For 2012 >

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We just mentioned the surprise trade deficit posted by Australia.

Here’s an even more interesting stat. Gold sales collapsed.

NON-MONETARY GOLD

In trend terms, exports of non-monetary gold fell $64m (5%) to $1,329m.

In seasonally adjusted terms, exports of non-monetary gold fell $1,070m (56%) to $856m.

Non-monetary gold, btw, just means gold not held by monetary authorities.

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First Japan goes from net exporter to posting trade deficits. And now… Australia.

Here’s the report: In January, the country posted a seasonally adjusted A$673 million deficit vs. expectations of a surplus of A$ 1.5 billion, according to Dow Jones.

The Aussie dollar is instantly falling on the news.

We’d caution that pretty much all January stats are a little bit suspect due to the timing of the Chinese New Year. But still. It’s a surprise, and perhaps worrisome.

This one-year chart does show that a deficit happened last year, although not as deep.

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UPDATE: The trade gap came in wider than expected at $47.8 billion.

This is a big jump from the $43.3 billion gap from October.

Analysts had expected a $45 billion gap.

Here’s a chart from the report.

Also from the report, some commentary about trade with some of our major partners.

• The goods deficit with Canada increased from $2.2 billion in October to $3.0 billion in November. Exports decreased $1.3 billion (primarily automobiles, parts, and accessories and other household goods) to $23.3 billion, while imports decreased $0.5 billion (primarily nonmonetary gold, civilian aircraft, and other precious metals) to $26.3 billion.

• The goods deficit with China decreased from $28.1 billion in October to $26.9 billion in November. Exports increased $0.2 billion (primarily civilian aircraft, engines, equipment, and parts; corn; and passenger cars) to $9.9 billion, while imports decreased $1.0 billion (primarily household goods and apparel) to $36.8 billion.
• The goods deficit with European Union increased from $8.0 billion in October to $9.7 billion in November. Exports decreased $1.4 billion (primarily fuel oil, drilling and oilfield equipment, and nonmonetary gold) to $22.0 billion, while imports increased $0.4 billion (primarily petroleum products, passenger cars, and household goods) to $31.7 billion.

ORIGINAL POST: First big datapoint of the day: At 8:30 AM the November trade deficit comes out.

Analysts expect a gap of $45 billion. That’ would be ups lightly form the $43.5 billion in October.

Technically, the trade gap is subtracted from GDP, but actually the higher the number the better, since that means more trade and that means more economic activity.

We’ll have the number here LIVE when it comes out.

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The Bank of England’s Monetary Policy Committee is due to meet today, when it is expected to keep interest rates at a record low of 0.5 per cent, despite inflation soaring.

It will be the 32nd consecutive month that the interest rate has been held at this level.

According to the Consumer Price Index, inflation hit 5.2 per cent in September, almost triple the Government’s target.

There is increasing concern that the UK economy could fall into recession in the final quarter of 2011, but a further increase in quantitative easing (QE) is not anticipated.

Last month the MPS increased QE by £75 billion in an effort to boost the economy, but the situation has continued to deteriorate.

However, analysts believe that further action could be taken early next year if the economy continues to flounder.

The ongoing eurozone crisis is considered by the Bank of England to be a major threat to the UK’s economic recovery, and EU leaders remain unable to agree on a solution.

Greece, Portugal and Ireland have already sought bailout funding after their borrowing costs reached critical levels and there is now concern that Italy could also be forced to seek help.

Italy’s difficulties caused the Confederation of British Industry to reduce its growth forecasts for the UK economy from 1.3 per cent to 0.9 per cent for 2011.

It also downgraded its forecast for 2012, from 2.2 per cent to 1.2 per cent.

The crisis in the eurozone has caused international demand for UK goods to fall, with the trade deficit widening to £9.8 billion in September from £8.6 billion in August.

This morning, there was speculation that Germany was planning to create a two-tier eurozone, with struggling countries leaving the single currency.

This has been denied by Germany’s chancellor, Angela Merkel.