The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care
| Released on 2/14/08 For Dec 2007 | ||||||||||||
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Highlights
The nation's trade deficit narrowed sizably in December, to $58.8 billion from November's $63.1 billion. The data tell the story of the economy with imports softening, down 1.1 percent and reflecting softening domestic demand especially for imported cars, and exports strengthening, rising 1.5 percent and reflecting strong global demand for capital goods. By country, the gap with China narrowed more than $5 to $18.8 billion with the Japanese gap also down, to $6.6 billion.
The non-oil gap showed its best reading in more than four years at under $35 billion. But the nation continues to import oil aggressively with the oil gap widening $1.5 billion to $31.5 billion as higher prices more than offset lower volume. For all of 2007, the nation's petroleum deficit came in at a record $293.5 billion, up nearly $25 billion from 2006.
A narrowing deficit, the result of limited imports, may be a silver lining of the economic slowdown at home. International demand for the nation's capital goods, boosted by the weak currency and centered in demand for Boeing aircraft, may likely become a major feature of the 2008 economy. Today's data will boost estimates for fourth-quarter GDP revisions and may help the dollar and stocks. Treasury International Capital data on tomorrow's calendar will offer the latest on foreign appetite for U.S. investments.
The U.S. international trade gap worsened in November to $63.1 billion from a $57.8 billion shortfall in October. The deterioration in the gap was due to an acceleration in import growth while exports gains slowed. Both petroleum and nonpetroleum imports jumped in the latest month. On the export side, the softening was mainly due to a drop in aircraft shipments. We are likely to see a reversal of both in the December data.
International trade balance Consensus Forecast for December 07: -$61.6 billion
Range: -$65.5 billion to -$59.1 billion
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Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar. |
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The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth. |
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