Summary
Earlier today, the Labor Department reported that import prices rose 0.2% during September. Recent trends continue to indicate that inflationary pressures from this source persist. Elsewhere, the Commerce Department reported that the US trade deficit for August came in at $54.0 billion, up from July's revised $50.5 billion.
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Import Prices
According to today's release from the Labor Department, import prices recorded a 0.2% increase during September, versus a revised 1.4% increase during August. (The August change originally had been reported as 1.7%.)
Based on today's report, the price of petroleum imports rose a modest 0.6% in September, modest relative to August's increase of 8.3%. (Petroleum prices for August were originally reported at +9.6%.) September prices for non-petroleum imports were up a reported 0.1%, versus a 0.3% gain in August. (The August gain was originally reported at 0.4%.)
As of September, import prices were up 7.8% year over year, versus an increase of 7.0% for the 12 months ended August. For the three months ended September, prices were up at a 8.1% annual rate, which compares with a 6.4% rate for the three months ended August.
The following table is a way of illustrating how the United States has been importing a rising level of inflation from abroad, a sensible outcome when contemplated in commonsense terms. Since the US is a nation that imports more and more of what it consumes, it therefore produces less and less of it domestically. And this rising level of imports has been against the backdrop of a falling exchange-rate value for the dollar, on balance, over the last couple years, give or take. This just happens to parallel the swing in import prices over roughly the same period.
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U.S. IMPORT PRICES
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12-Month Change as of
Month of Year Shown
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Month 2004 2003 2002 2001 2000
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September 7.8% 0.7% -0.4% -5.6% 6.1%
August 7.0% 2.0% -1.3% -4.4% 5.9%
July 5.6% 2.3% -1.7% -4.1% 6.8%
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3-Mo. Avg. 6.8% 1.7% -1.1% -4.7% 6.3%
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June 5.7% 2.2% -3.6% -2.6% 7.9%
May 6.9% 1.0% -3.7% -0.8% 6.1%
April 4.6% 1.8% -3.6% -0.7% 6.6%
March 1.1% 6.8% -5.6% -1.6% 9.2%
February 0.9% 7.5% -8.3% +0.2% 9.3%
January 2.2% 5.8% -8.9% +2.8% 7.1%
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9-Mo. Avg. 4.6% 3.3% -4.1% -1.9% 7.2%
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August Trade Data
Earlier today, the Commerce Department reported that the US trade deficit (goods and services) widened to $54.0 billion in August. This compared with a revised $50.5 billion deficit in July. The July figure was originally reported at minus $50.1 billion. (For reference purposes, the 6/2004 deficit of $55.021 billion remains the monthly record.)
The August deficit was the result of imports that totaled $150.07 billion, and exports totaling $96.03 billion. These figures compared with respective revised import/export figures for July of $146.46 billion and $95.92 billion.
Following are the eight months of now-reported trade deficits for 2004 (in billions), along with the comparable figures for 2003. The latest revisions have been incorporated.
2004 2003
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January $ 45.768 $ 41.354
February $ 45.785 $ 40.375
March $ 47.052 $ 43.659
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1st Qtr. $138.605 $125.388
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April $ 48.194 $ 42.519
May $ 47.070 $ 40.827
June $ 55.021 $ 40.035
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2nd Qtr. $150.285 $123.381
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July $ 50.547 $ 40.814
August $ 54.041 $ 40.185
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$104.588 $ 80.999
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8-Mo. Total $393.478 $329.768
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The reported July and August trade data are what will be available for use by the Commerce Department to project the "net exports" component of its third-quarter advance estimate of gross domestic product, due for release on 10/29. The sum of these months is a negative $104.6 billion, versus the April/May total of minus $95.3 billion, the figure that was available to Commerce when it projected the net-export impact on its advance estimate of second-quarter GDP.
Negative trade figures represent a one-for-one subtraction from gross domestic product, but the monthly figures do not flow through to GDP in the precise amounts of the monthly trade series that was reported today. However, the monthly trade data generally do reflect overall trend.
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