The US deficit widened in December and by more than expected. The deterioration was largely a function of oil imports. Simply put, the US imported for oil products and at higher prices. The non-energy deficit was largely steady at $16.7 bln from $16.5 in Nov.
One important implication of the wider real trade deficit is that the 0.5% the net exports contributed to US Q4 GDP will likely be revised down. On top of that, the wholesale inventory figure out earlier this week also points to a modest downward revision to Q4 GDP's preliminary 5.7% annual growth pace.
Another implication of the US trade figures is the widening growth differentials warn of further deterioration in the trade balance in the months ahead.
A third implication of the data is what is says about the world economy. US exports, which academic studies suggest is more sensitive to the strength of the foreign economies than the dollar's exchange rate, rose 3.3%, the biggest gain since March 2007.
Implications of US Trade Data
![Implications of US Trade Data]()
Reviewed by magonomics
on
February 11, 2010
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