by Calculated Risk on 7/14/2005 01:24:00 AM

Two months ago I started to build a simple model to project the trade deficit. I didn't make as much progress as I had hoped, but the first two components (oil and China) have performed reasonably well for two months..

First, I projected the oil trade balance. And then I projected the trade deficit with China.

My model projected a deficit of $15.5 Billion Seasonally Adjusted in energy related petroleum product imports. The actual number was $15.8 Billion (see Exhibit 9). This is an error of just under 2%.

For the trade balance with China, my model projected a deficit of $15.5B NSA (SA is not available). The actual number (see Exhibit 14) was $15.7B or an error of 1.2%.

Here are each of the components and how the model performed:

ITEM	Projection	Actual	Error
US Exports to China (NSA)	$3.4B	$3.3B	3%
US Imports from China (NSA)	$18.9B	$19.05B	<1%
US Trade Deficit: China (NSA)	$15.5B	$15.75B	1.6%
Oil: Imports SA	$17.4B	$18.1B	3.9%
Oil: Exports SA	$1.9B	$2.3B	17%
OIL Balance SA	$15.5B	$15.8B	2%

Some internal data:

ITEM	Projection	Actual	Error
Oil: Contract Price BBL	$42.88	$43.08	<1%
Oil: BBLs Crude	337.9M	318.6M	6%
Oil: Price Other BBL	$49.31	$48.99	<1%
Oil: BBLs Other	85M	99.7M	15%
Oil: Oil Imports NSA	$18.7B	$18.6B	<1%

It appears my SA factor for oil imports was somewhat off the mark. I'll have to take another look at that step. There is much more to do!