The trade deficit (or surplus) is simply the difference between what a nation imports from other countries minus what it exports to the rest of the world. Data released at the end of last week showed that the US trade deficit with the rest of the world had fallen to near a 3 year low and gave stock markets a shot in the arm (but as we saw yesterday, most still lost ground against where they stood a week earlier). The deficit fell to $38.5 billion in December, according to Commerce Department figures.
America imported its lowest level of crude oil since 1997 over the course of 2012 whilst exports of petroleum (refined products) hit record levels – this tends to suggest that existing reserves were drawn down. Exports were worth $168.4 billion whilst imprts dipped by $6.2 billion to $224.9 billion for the month. The figures are generating optimism that the anaemic Q4 growth figure of 0.1% will be revised upwards since the data was not available at the time and a widening trade deficit had been anticipated. The figures may boost the Q4 data by 0.7% which would equate to an annualised growth rate of 0.6%. The GDP figures will be revised at the end of the month.
The bilateral trade deficit with China has widened to a new record of $315 billion which will serve to re-ignite (justifiable) claims that China manipulates the Dollar-Yuan exchange rate to favour its exports. By keeping the Yuan artificially low against other currencies; critics claim that China unfairly subsidises its exports, a claim Beijing, naturally, refutes. The record bilateral deficit will also renew demands that China goes further in opening its own, potentially huge, domestic market to US exports.
US Trade Deficit Near 3 Year Low
Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.