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 Came in at $43.4 Billion in December
Posted Under: Data Watch • Trade
Supporting Image for Blog Post

Implications: The trade deficit widened in December as exports fell to the lowest level in four years. Slower growth abroad, along with a stronger dollar have slowed exports. For example goods exports to Canada and China are down 13.4% and 16.8% respectively from a year ago. Exports of goods to Africa are down 33.2% while exports to South & Central America are down 20.9%. This will not last forever, but may continue to be a factor for the coming year. Meanwhile, while increasing $0.6 billion in December, imports are also below year-ago levels. The largest contributor to the decline in the past year has been petroleum, which is now down 48.7% from a year ago. Yes, crude prices are down in the past year, impacting the value of crude imports, but the quantity of crude imports also fell in 2015, down 1.4% after dropping 4.0% in 2014. Back in 2005 US petroleum and petroleum product imports were eleven times exports. In December, these imports were only 1.8 times exports. Ever wondered why, with all the turmoil out of the Middle East, oil prices have continued to decline, not spike higher, like we had usually seen in the past? It's because the US is becoming more and more important in the energy space as a producer, bringing a stabilizing effect to the world. You can thank fracking and horizontal drilling for that. In fact, after years of running a trade deficit, the US ran a trade surplus in goods with OPEC in 2015! Plugging today's figures into our GDP models suggests trade will be a non-factor, either up or down, in the first quarter of the 2016 while the overall economy grows at a about a 1% annual rate. Although tepid, we think the government is still having problems seasonally-adjusting its data and so we then expect much faster growth in the middle two quarters of the year.

Click here for PDF version
Posted on Friday, February 5, 2016 @ 11:08 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 © 2023 All rights reserved.