Summary
Yesterday morning, the Commerce Department reported that the May trade deficit came in at $55.3 billion. This compared with a revised April deficit of $56.9. Overall, the May results look a little "funny," as in better than they should have been. Perhaps the Commerce Department is getting a head start on "massaging" second-quarter GDP a little?
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The May trade deficit (goods and services) came in at $55.3 billion, down $1.6 billion from April's revised shortfall of $56.9 billion (originally reported at minus $57.0 billion). The consensus forecast for May was contemplating red ink of something around $57.0 billion, a result that, frankly, was more in line with reality than the one actually released.
May's reported deficit was the result of imports of $162.2 billion, and exports of $106.9 billion This compared with a revised import/export result for April of $163.6 and $106.7 billion.
The Numbers in General
Based on the Commerce Department's report of yesterday, the US trade deficit (goods and services) came in at $57.0 billion in May, compared with a revised April deficit of $53.6 billion. (The April figure was originally reported at a negative $57.0 billion.)
February 2005's shortfall of $60.1 billion remains the monthly record. November 2004's $59.0 billion presently holds down second place.
The trade deficit for 2005's first five months exceeded last year's January-May red ink by a substantial $48.0 billion, or 20.3%.
2005 2004 Y/Y
------- ------- -------
May $ 55.349 $ 48.742 13.6%
April $ 56.899 $ 48.406 17.5%
-------- -------- -----
Subtotal $112.248 $ 97.148 15.5%
-------- -------- -----
March $ 53.562 $ 46.966 14.0%
February $ 60.117 $ 45.834 31.2%
January $ 58.077 $ 46.053 26.1%
-------- -------- -----
1st Quart. $171.756 $138.853 23.7%
-------- -------- -----
Year to Date $284.004 $236.001 20.3%
======== ======== =====
May's trade deficit was the result of imports totaling $162.24 billion, and record exports totaling $106.89 billion. These figures compared with respective revised import/export figures for April of $163.64 billion and $106.74 billion. Thus, in comparing May to April, imports fell $1.40 billion or 0.9%; exports rose $0.15 billion or bit more than 0.1%.
The net export result is one of six major components of gross domestic product. The April and May monthly average, which will be used to calculate the "advance" estimate of second-quarter GDP to be released on 7/29, was $56.12 billion. This compared with a monthly average of $57.25 during the first quarter. Thus, quarter over quarter, the trade component is likely to provide a modest boost to the Commerce Department's initial rendering of GDP.
The Crude Oil Data
As the table below indicates, May crude oil imports totaled $13.73 billion, $0.32 billion less than April's $14.05 billion. The decrease was the net result of a small increase in import volume (+1.6%), accompanied by a 3.8% decline in price ($43.08 per barrel in May, versus $44.76 per barrel in April).
Crude oil imports were equal to 8.4% of total imports in May, down from 8.6% in April. In May, crude imports were equal to 10.1% of goods-only imports, which were reported at $135.3 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 2005's first five months, crude oil imports totaled 1.579 billion barrels, valued at $63.5 billion. (This was equal to about 7.9% of total imports. Of goods-only imports for this five-month period [$672.3 billion], crude imports equaled 9.5%.)
By comparison, during 2004's first five months, crude oil imports totaled 1.558 billion barrels, only modestly lower than 2005 volume. However, owing to increasing prices, 2005's five-month cost exceeded last year's by a very substantial $15.9 billion, or 33.4%.
For all of 2004, crude oil imports totaled $131.7 billion, about 7.5% of total imports. Of goods-only imports for the twelve-month period ($1472.9 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. (%)
-----------------------------------------------
2005
May $ 163.241 0.319 $ 13.726 $43.08 8.4
Apr. 163.640 0.314 14.045 44.76 8.6
Mar. 156.914 0.326 13.410 41.14 8.5
Feb. 161.877 0.297 10.942 36.85 6.8
Jan. 160.656 0.323 11.410 35.55 7.1
-----------------------------------------------
2005
S/T $ 806.328 1.579 $ 63.533 $40.24 7.9
===============================================
2004
Dec. $ 156.393 0.321 $ 11.689 $36.46 7.5
Nov. 157.618 0.330 13.577 41.19 8.6
Oct. 154.098 0.313 13.107 41.84 8.5
Sep. 149.607 0.297 11.143 37.52 7.5
Aug. 150.705 0.334 12.196 36.54 8.1
July 147.523 0.324 10.818 33.38 7.3
June 149.143 0.345 11.631 33.74 7.8
May 145.141 0.318 10.535 33.14 7.3
Apr. 142.857 0.312 9.662 31.00 6.8
Mar. 142.139 0.330 10.118 30.66 7.1
Feb. 138.223 0.288 8.414 29.17 6.1
Jan. 135.584 0.310 8.853 28.57 6.5
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2004
Total $1769.031 3.822 $131.743 $34.47 7.5
===============================================
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%, May 2005 = 10.1%.
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What would the deficit look like if the United States neither imported nor exported any crude oil?
Employing the figures in the above tables (remembering there is the mixing of seasonally adjusted and unadjusted data), in the absence of oil imports, the May deficit would have come in at $41.6 billion, $13.7 billion or 24.8% lower than the reported $55.3 billion.
For 2005's first five months, the deficit came in at $284.0 billion. With no US crude oil imports, the figure would have been $220.5 billion, or 22.4% less.
During 2004, zero oil imports would have lowered the year's deficit by $131.7 billion, or by about 21.3%.
Some Venues in Which the
Deficit is Being Created
--------------------------------
U.S. TRADE DEFICIT BY SELECTED
COUNTRIES/REGIONS (Ranked in
Order of May Size. Amounts
in Billions of $s and Are
Not Seasonally Adjusted)
--------------------------------
2005 2005
Country/ --------------------
Region May April
--------------------------------
China 15.754 14.715
OPEC 7.268 7.060
Japan 6.583 7.177
Canada 4.754 5.403
Germany 4.493 4.033
Mexico 4.476 4.400
Italy 1.678 1.479
Korea 1.502 1.301
Taiwan 0.873 0.740
Russia 0.781 1.417
UK 0.631 0.848
--------------------------------
---------------------------------------------------------
U.S. TRADE DEFICIT BY SELECTED COUNTRIES/REGIONS
(Ranked in Order of 2005 Size. Amounts Are in
Billions of $s and Are Not Seasonally Adjusted)
---------------------------------------------------------
2005 % Change
Country/ Through ---------
Region May-a Annual-b 2004 2003 2004/2003
---------------------------------------------------------
China 74.499 173.998 161.938 124.068 30.5
Japan 34.671 83.210 75.562 66.032 14.4
OPEC 33.219 79.726 71.843 51.065 40.7
Canada 27.224 65.338 66.480 51.671 28.7
Germany 20.056 48.134 45.850 39.281 16.7
Mexico 19.711 47.306 45.067 40.648 10.9
Italy 7.512 18.029 17.413 14.854 17.2
Korea 7.197 17.273 19.756 13.157 50.2
Russia 4.978 11.947 8.930 6.171 44.7
Taiwan 4.568 10.963 12.879 14.152 -9.0
UK 3.681 8.834 10.274 8.967 14.6
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a = actual 2005 cumulative. b = annualized.
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