Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  The trade deficit in goods and services shrank to $38.3 billion in November

 
Implications:  Get ready for a blowout real GDP report for the fourth quarter of 2010, showing growth at an annual rate of 5% to 6%.  This is well above the consensus expected pace of 3.3%.  Based on today's data for November as well as figures for prior months, it looks like net exports alone will add more than three percentage points to real GDP growth in Q4.  This is the exact opposite of what happened in the second quarter when many mistakenly thought we had entered a "soft patch."  Due to problems with the way the government seasonally adjusts oil prices, trade was a huge negative for real GDP growth in Q2/Q3.  However, the same adjustment issue will likely result in an offsetting and very large positive contribution from trade in Q4.  (For more explanation, see our Monday Morning Outlook from 11/8/2010).  Beneath the headlines, both exports and imports continue to recover from the financial panic that reduced cross-border trade flows even more than purely domestic activity.  Exports are now only 3.6% below the prior peak set in mid-2008.  Other recent news on the trade sector shows the growing threat of higher inflation, with both import and export prices continuing to surge.  Import prices increased 1.1% in December and are up 4.8% in the past year.  Excluding oil, import prices were up 0.4% in December and are up 2.7% in the past year.  Export prices rose 0.7% in December and are up 6.5% in the past year.  Excluding farm products, export prices increased 0.6% in December and are up 5.1% in the past year.  Expect further large gains in trade prices as commodity markets react to an overly loose Federal Reserve.   

Click here for the full report.

Posted on Thursday, January 13, 2011 @ 10:14 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.