Summary
Yesterday morning, the Commerce Department reported that the nation's trade deficit in February rose to a record $61.04 billion. This was more than $2.5 billion higher than January's revised shortfall of $58.50 billion. Of interest and potential concern is that crude oil imports made no contribution to February's increased deficit.
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Based on the Commerce Department's report of yesterday, the US trade deficit (goods and services) came in at $61.04 billion in February, up $2.54 billion from a revised January deficit of $58.50 billion. (The January figure was originally reported at a negative $58.27 billion.)
February now stands as the largest monthly shortfall in history, bettering by $1.62 billion November 2004's then-record $59.42. The deficit for 2005's first two months exceeded last year's January/February red ink by a very substantial $37.83 billion, or 46.3%.
2005 2004
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February $ 61.036 $ 45.863
January $ 58.504 $ 45.847
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$119.540 $ 81.710
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The net export result is one of six major components of gross domestic product. March trade figures and the revisions to February's results will not be available when the Commerce Department releases its advance estimate of first-quarter GDP on 4/28; Commerce will estimate them. Nevertheless, I suspect the poor combined January/February trade performance will see economists adjusting downward their GDP forecasts as a result.
The trade deficit for February was the result of imports totaling $161.52 billion (a record), and exports totaling $100.48 billion. These figures compared with respective revised import/export figures for January of $158.94 billion and $100.43 billion. Thus, in comparing February to January, imports were up about 1.6%; exports rose less than 0.1%.
As the table appearing below indicates, February crude oil imports totaled $10.94 billion, about $470 million less than January's $11.41 billion. Thus, oil played no role in the rise in February's total deficit. The news from this sector going forward is not likely to be as good, however.
The February oil decline was entirely the result of a drop in total import volume of about 8%, to 297 million barrels in February from 323 million barrels in January. Meanwhile, the average price per barrel rose 4.2%, to $36.85 from $35.35.
World oil prices were up sharply during March, which should be reflected in the trade figure for March when it is reported in May. As a guide, the per-barrel price used in computing the October 2004 trade figure was a record $41.79. Until their recent pullback, world prices stood at higher levels than those reached in October.
Crude oil imports were equal to 6.8% of total imports in February, down from 7.2% in January. In February, crude imports were equal to 8.1% of goods-only imports, which were reported at $135.9 billion.
(NOTE: The above calculations take license with mixing seasonally adjusted and seasonally unadjusted data. For the purpose at hand, the distortion in not significant.)
During 2004, crude oil imports totaled $131.7 billion, about 7.5% of total imports. Of goods-only imports for the twelve-month period ($1473.1 billion), crude imports equaled 8.9%. (Again, these calculations mix seasonally adjusted and seasonally unadjusted data).
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TOTAL U.S. IMPORTS AND CRUDE OIL IMPORTS*
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Crude Oil Imports**
Total -----------------------
Imports# Barrels Value Avg. Crude/
Year/ -------- -------------- Price Total
Month (Amounts in Billions) Per Bbl. (%)
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2005
Feb. $ 161.519 0.297 $ 10.942 $36.85 6.8
Jan. 158.937 0.323 11.410 35.35 7.2
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2005
S/T $ 320.056 0.620 $ 22.352 $36.05 7.0
===============================================
2004
Dec. $ 156.169 0.321 $ 11.760 $36.63 7.5
Nov. 156.738 0.326 13.435 41.15 8.6
Oct. 154.028 0.316 13.198 41.79 8.6
Sep. 148.796 0.304 11.421 37.62 7.7
Aug. 150.397 0.331 12.044 36.37 8.0
July 146.760 0.319 10.611 33.28 7.2
June 148.542 0.347 11.697 33.76 7.9
May 144.393 0.316 10.474 33.12 7.3
Apr. 142.973 0.312 9.668 31.00 6.8
Mar. 142.531 0.332 10.162 30.64 7.1
Feb. 138.293 0.288 8.395 29.17 6.1
Jan. 134.633 0.309 8.835 28.55 6.6
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2004
Total $1764.243 3.821 $131.700 $34.47 7.5
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2003 $1517.011 3.676 $99.167 $26.98 6.5
1998 1098.363 3.243 37.252 11.49 3.4
1993 713.058 2.543 38.469 15.13 5.4
1988 545.715 1.888 25.844 13.69 4.7
1983 323.874 1.294 38.184 29.51 11.8
1978 208.191 2.392 32.140 13.43 15.4
1973 89.342 1.393 4.593 3.30 5.1
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*Source: US Department of Commerce. **Not
seasonally adjusted. #Goods and services,
seasonally adjusted. MEMO ITEM: Crude oil
to goods-only imports: 1973 = 6.5%, 2004
= 8.9%.
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Employing the figures in the above tables, here's another way of assessing oil imports within the context of the nation's trade deficit (in approximate terms, because of the mixing of adjusted and unadjusted data). What would the deficit look like if the United States neither imported nor exported any crude oil?
In February, the goods-and-services deficit came in at $61.0 billion. With no US crude oil imports, the figure would have been $50.1 billion, or 17.9% lower. For all of 2004, zero oil imports would have lowered the cumulative deficit by $131.7 billion, or by about 21.3%.
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U.S. TRADE DEFICIT BY SELECTED
COUNTRIES/REGIONS (Ranked in
Order of Feb. Size. Amounts
in Billions of $s and Are
Not Seasonally Adjusted)
--------------------------------
2005 2004
Country/ --------------------
Region February January
--------------------------------
China 13.871 15.255
Japan 6.867 6.210
OPEC 6.255 6.053
Canada 5.770 6.264r
Germany 3.674 3.547
Mexico 3.668 2.909
Italy 1.317 1.462
Korea 1.187 1.862
Taiwan 1.035 1.172
UK 0.582 0.755
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U.S. TRADE DEFICIT BY SELECTED COUNTRIES/REGIONS
(Ranked in Order of Cumulative 2004 Size. Amounts Are
in Billions of $s and Are Not Seasonally Adjusted)
---------------------------------------------------------
2004 2003 % Chg.
Country/ ------------------- ------------------- 2004/
Region December Cumulative December Cumulative 2003
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China 14.264 161.978 9.883 124.068 30.6
Japan 6.850 75.195 5.760 66.032 13.9
OPEC 5.816 71.867 4.568 51.065 40.7
Canada 4.853 65.764 4.520 51.671 27.3
Germany 4.246 45.855 4.131 39.209 17.0
Mexico 3.399 45.068 3.113 40.648 10.9
Korea 1.342 19.829 1.416 13.157 50.7
Italy 1.697 17.378 1.355 14.854 17.0
Taiwan 0.638 12.887 0.851 14.152 -8.9
UK 1.279 10.442 1.094 8.967 16.4
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