|
|
|
|
|
Brian Wesbury
Chief Economist
|
|
Bob Stein
Deputy Chief Economist
|
|
| The Trade Deficit in Goods and Services Came in at $43.0 billion in September |
|
Posted Under: Data Watch • Trade |
Implications: The trade deficit came in much larger than expected in September as exports declined by $3 billion and imports were roughly unchanged. The decline in exports reflects monthly volatility, not the start of some new downward trend. Meanwhile, on the import side, the key trend of the past several years remains intact: non-petroleum imports hit a new record high, reflecting solid growth in US purchasing power, while petroleum imports kept falling. Higher energy production, due to hydraulic fracturing, horizontal drilling, and seismic imaging, is transforming our trade relationship with the rest of the world. Nine years ago, back in September 2005, the US imported 14 times as much petroleum product as it exported. Since then, petroleum product exports are up 647% while imports are up only 10%. So now, petroleum product imports are only 2.1 times exports. This remarkable transformation was not because of government support or QE, it was due to American innovation and entrepreneurship. Now policymakers are helping this trend, with the government giving two companies permission to ship condensate to foreign buyers. Given the huge glut of oil in Texas, we expect more moves to allow exports regardless of the outcome of today's elections and for the US to move to a petroleum trade balance and perhaps even surpluses in the next few years. In the meantime, as a result of today's numbers, it looks like net exports added only about 0.4 percentage points to real GDP growth in Q3, much lower than the original estimate of 1.3 percentage points. Some of this may be offset by better inventories, but suggests real GDP grew at a 2.5% to 3% annual rate in Q3, not the 3.5% pace the government reported a week ago. In other recent news, automakers reported car and light truck sales at a 16.5 million annual rate in October, an increase of 0.2% versus September and 7% better than a year ago. So far, it looks like real PCE – consumer spending on goods and services, adjusted for inflation – is growing at a 2% annual rate in Q4, slightly faster than in Q3.
Click here for PDF version
|
|
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.
|
|
Archive
Search by Topic
|
|
|
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 professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
|