Thursday, February 05, 2015

Trade Deficit increases in December to $46.6 Billion

by Bill McBride on 2/05/2015 08:55:00 AM

The Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $46.6 billion in December, up $6.8 billion from $39.8 billion in November, revised. December exports were $194.9 billion, down $1.5 billion from November. December imports were $241.4 billion, up $5.3 billion from November.
The trade deficit was much larger than the consensus forecast of $38.0 billion.

The first graph shows the monthly U.S. exports and imports in dollars through December 2014.

U.S. Trade Exports Imports Click on graph for larger image.

Imports increased and exports decreased in December.

Exports are 17% above the pre-recession peak and up 1% compared to December 2013; imports are 4% above the pre-recession peak, and up about 5% compared to December 2013. 

The second graph shows the U.S. trade deficit, with and without petroleum, through December.

U.S. Trade Deficit The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil imports averaged $73.64 in December, down from $82.95 in November, and down from $91.33 in December 2013.  The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012.

Note: There is a lag due to shipping and long term contracts, but oil prices will really decline over the next several months - and the oil deficit will get much smaller.

The trade deficit with China increased to $28.3 billion in December, from $24.5 billion in December 2013.  The deficit with China is a large portion of the overall deficit.

The increase in the trade deficit was due to a higher volume of oil imports (volatile month-to-month), a larger deficit with China, and a larger deficit with the Euro Area ($11.7 billion in Dec 2014 compared to $8.8 billion in Dec 2013).