by Calculated Risk on 8/13/2005 10:11:00 PM

Three 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) performed reasonably well for two months... but I underestimated China for June.

Here are my projections for June. My model projected a deficit of $17.0 Billion Seasonally Adjusted in energy related petroleum product imports. The actual number was $17.77 Billion (see Exhibit 9). This is an error of 4.3%.

For the trade balance with China, my model projected a deficit of $16.3B NSA (SA is not available). The actual number (see Exhibit 14) was $17.6B or an error of 7.3%.

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

ITEM	Projection	Actual	Error
US Exports to China (NSA)	$3.2B	$3.4	6%
US Imports from China (NSA)	$19.5B	$20.99B	7%
US Trade Deficit: China (NSA)	$16.3B	$17.6B	7%
Oil: Imports SA	$19.3B	$19.9B	3%
Oil: Exports SA	$2.3B	$2.14B	7%
OIL Balance SA	$17.0B	$17.77B	4%

Some internal data:

ITEM	Projection	Actual	Error
Oil: Contract Price BBL	$45.11	$44.40	1.6%
Oil: BBLs Crude	328.0	328.3M	0%
Oil: Price Other BBL	$51.88	$51.58	<1%
Oil: BBLs Other	90M	103.7M	13%
Oil: Oil Imports NSA	$19.5B	$19.9B	2%

I really missed on China. I wondered about the surge in imports at LA and attributed them to Japan (imports in Japan were up $1.26B). Overall, my guess of $57.7B was on the high end of estimates, and I still underestimated the deficit for June!