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 Came in at $49.3 Billion in November
Posted Under: Data Watch • Trade

 

Implications: When President Trump sees today's report on the trade deficit in November, he may chalk it up as a win for his confrontational policy approach with our partners abroad as the trade deficit shrunk in November to $49.3 billion.  But, today's report should not be celebrated, and is a perfect example of why deficits or surpluses can be misleading. What matters more than the headline trade deficit number - and which you will not hear about as much - is the total volume of trade – imports plus exports – which signals how much businesses and consumers interact across borders.  Looking at that data, US trade came substantially off its record all-time highs in October as exports declined by $1.3 billion while imports declined by $7.7 billion. So, the reason the trade deficit shrunk so drastically in November was because imports fell much faster than exports, nothing to get excited about. Overall, in the past year exports are up 3.7%, while imports are up 3.2%, signaling still healthy gains in the overall volume of international trade.  While many are worried about protectionism from Washington, especially regarding China, we continue to think this is a trade skirmish, and the odds of an all-out trade war that noticeably hurts the US economy are slim.  We believe better trade agreements for the United States and world are on the way.  We have already seen it happen with several countries, and now China looks to be extending a bit of an olive branch, too. Average tariffs in China were cut from 9.8% in 2017 to 7.5% in 2018. We see this as real progress, and just the start.  The US's negotiating position simply continues to strengthen, in no small part due to the rise of the US as an energy powerhouse.  As recently as 2005, the US was importing more than ten times the petroleum products that we were exporting.  As of November, imports are down to 1.04 times exports and this trend should continue.  Not only does this reduce US reliance on foreign trade partners and lower their bargaining power, it has served to shift power dynamics on a global scale (witness the political turmoil in Saudi Arabia).  So at the end of the day, we will continue to watch trade policy as it develops, but don't see any reason to sound alarm bells. 

Click here for PDF version

Posted on Wednesday, February 6, 2019 @ 11:50 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.