Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The Trade Deficit in Goods and Services at $43.9 Billion in October
Posted Under: Data Watch • Trade
Supporting Image for Blog Post

Implications: A disappointing report out of the trade sector today. Exports declined by $2.7 billion while imports fell by $1.3 billion, resulting in an increase in the trade deficit. The value of total trade, exports plus imports, is down 6% from a year ago. Slower growth abroad, along with a stronger dollar have slowed exports. For instance, goods exports to Canada and Mexico are down 15.3% and 4.6%, respectively, from a year ago. Exports of goods to Africa are down 31.1% while exports to South & Central America are down 22.4%. This will not last forever, but may continue to be a factor over the coming year. Meanwhile, imports are also below year-ago levels. But the largest drop in imports, by far over the past year, and for October, was for crude oil which is now down 58% from a year ago. Back in 2005 US petroleum and petroleum product imports were eleven times exports. In October, these imports were only 1.6 times exports. For the first time since at least 1986, the US is running a trade surplus in goods with OPEC over the past year! This has a destabilizing impact on the Middle East, which compounds the problems of a vacuum in global geo-political leadership. The US is headed toward energy independence thanks to fracking and horizontal drilling, but a side-effect may be more conflict in the Middle East. Despite lower oil prices over the past year and some recent dips in drilling activity, US domestic oil production is still expected to average 9.3 million barrels per day in 2015, a 600,000 barrel per day increase from 2014. Entrepreneurs and engineers, through the use of new technologies, have changed the way the world works and there's more to come. Plugging today's figures into our models suggests trade will be a slight drag on economic growth in Q4, consistent with a forecast of real GDP growth at around a 1.5% annual rate for the last quarter of the year.

Click here for a PDF version
Posted on Friday, December 4, 2015 @ 11:37 AM • Post Link 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 professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.