Summary
Yesterday morning, the Commerce Department reported a September trade deficit of 66.11 billion, the largest monthly shortfall ever. September's trade gap was roughly $6.8 billion or 11.4% greater than August's revised red ink of $59.35 billion.
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The Numbers in General
* The September trade deficit (goods and services) came in at $66.11 billion, up a very sizable $6.76 billion or 11.4% from August's revised deficit of $59.35 billion (originally reported at minus $59.03 billion). The consensus forecast for September had contemplated a shortfall of around $61 billion.
* The September deficit took over first place as the largest ever. It easily eclipsed, by $5.7 billion, February 2005's former record of $60.52 billion.
NOTE: It was incorrectly reported in an earlier missive that November 2004's deficit of 58.98 billion held down third place. In fact, June 2005's deficit of $59.49 billion is the third largest on record.
* The trade deficit for 2005's first nine months exceeded last year's January-September red ink by a sizable $81.43 billion, or 18.2%.
2005 2004 Y/Y
-------- -------- -----
September $ 66.106 $ 51.939 27.3%
August $ 59.349 $ 54.195 9.5%
July $ 57.960 $ 51.331 12.9%
-------- -------- -----
3rd Quart. $183.415 $157.465 16.5%
-------- -------- -----
June $ 59.493 $ 54.894 8.4%
May $ 56.109 $ 48.742 15.1%
April $ 57.724 $ 48.406 19.2%
-------- -------- -----
2nd Quart. $173.326 $152.042 14.0%
-------- -------- -----
March $ 54.055 $ 46.966 15.1%
February $ 60.422 $ 45.834 31.8%
January $ 58.575 $ 46.053 27.2%
-------- -------- -----
1st Quart. $173.052 $138.853 24.6%
-------- -------- -----
Year to Date $529.793 $448.360 18.2%
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* September's trade deficit was the result of imports totaling $171.31 billion, and exports totaling $105.21 billion. These figures compared with respective revised import/export figures for August of $167.35 billion and $108.00 billion. Thus, in comparing September to August, imports rose $3.96 billion, or 2.4%; exports fell $2.79 billion, or about 2.6%.
* The Commerce Department noted that September exports were adversely affected by Hurricane Katrina.
* Versus August, September saw a decrease in the value of crude oil imports of about $1.2 billion (not seasonally adjusted).
* The net export result is one of six major components of gross domestic product. The deficit's July-September monthly average of $61.14 billion was higher than the previously reported July-August monthly average of $58.49 billion. In turn, this suggests that the trade-only impact on revised third-quarter GDP should be a negative one, when the revised GDP figures are reported later this month.
(NOTE: The second ("preliminary") estimate of third-quarter gross domestic product is scheduled for release on 11/29.)
The Crude Oil Data
* As the table below indicates, the value of September crude oil imports totaled $15.96 billion, down about $1.2 billion from August's $17.16 total, which was a record. The decline was the net result of a 14.6% drop in import volume, and a 8.9% rise in price ($57.32 per barrel in September, versus $52.65 per barrel in August).
* The monthly record for import volume was 344.7 million barrels, occurring in June of 2004.
* Although the cost of imported crude oil is different than the price of West Texas intermediate crude, which is the US benchmark grade, respective price trends certainly follow each other. The average of the WTIC September 1st and October 1st spot prices was $63.97 per barrel, versus the $57.32 per barrel cost assigned to imported crude oil in the September trade report. However, the September WTIC average price was $1.30 per barrel or almost 2% lower than the August average.
* Crude oil imports were equal to 9.3% of total imports in September, down from 10.3% in August. In September, crude imports were equal to 11.0% of goods-only imports, which were reported at $144.5 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 nine months, crude oil imports totaled 2.823 billion barrels, valued at $126.5 billion. (This was equal to about 8.6% of total imports. Of goods-only imports for this nine-month period [$1233.6 billion], crude imports equaled 10.3%.)
* By comparison, during 2004's first nine months, crude oil imports totaled 2.858 billion barrels, only slightly above 2005's volume. However, owing to increasing prices, 2005's nine-month cost exceeded 2004's by a very substantial $33.1 billion, or 35.5%.
* For all of 2004, crude oil imports totaled $131.7 billion, about 7.5% of total imports. Of goods-only imports ($1472.9 billion) for the twelve-month period, 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
Sep. $ 171.313 0.278 $ 15.962 $57.32 9.3
Aug. 167.345 0.326 17.155 52.65 10.3
July 164.318 0.312 15.298 49.03 9.3
June 165.303 0.328 14.578 44.40 8.8
May 161.841 0.319 13.726 43.08 8.5
Apr. 163.467 0.314 14.045 44.76 8.6
Mar. 156.875 0.326 13.410 41.14 8.5
Feb. 161.828 0.297 10.942 36.85 6.8
Jan. 160.795 0.323 11.410 35.55 7.1
-----------------------------------------------
2005
S/T $1473.085 2.823 $126.526 $44.82 8.6
===============================================
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%, September 2005 = 11.0%.
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What would the trade 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), the absence of oil imports would have produced a September deficit of $50.1 billion, $16.0 billion or 24.2% lower than the reported $66.1 billion.
For 2005's first nine months, the deficit came in at $529.8 billion. With no US crude oil imports, the figure would have been $403.3 billion, or 23.9% less.
During 2004, zero oil imports would have lowered the year's deficit by $131.7 billion, or by about 21.3%.
Selected Venues in Which
the Deficit is Being Created
--------------------------------
U.S. TRADE DEFICIT BY SELECTED
COUNTRIES/REGIONS (Ranked in
Order of Sept. Size. Amounts
in Billions of $s and Are
Not Seasonally Adjusted)
--------------------------------
2005 2005
Country/ --------------------
Region Sep. Aug.
--------------------------------
China 20.105 18.468
OPEC 9.052 8.983
Canada 7.386 6.609
Japan 6.405 6.590
Mexico 4.313 4.220
Germany 3.511 4.494
Taiwan 1.294 0.843
UK 1.293 1.003
Italy 1.273 2.065
Korea 1.213 1.302
Russia 0.931 0.768
--------------------------------
---------------------------------------------------------
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 2005 ---------
Region Sep.-a Annual-b 2004 2003 2004/2003
---------------------------------------------------------
China 146.318 195.091 161.938 124.068 30.5
OPEC 67.915 90.553 71.843 51.065 40.7
Japan 61.245 81.660 75.562 66.032 14.4
Canada 52.594 70.125 66.480 51.671 28.7
Germany 36.987 49.316 45.850 39.281 16.7
Mexico 36.528 48.704 45.067 40.648 10.9
Italy 14.615 19.487 17.413 14.854 17.2
Korea 11.956 15.941 19.756 13.157 50.2
Taiwan 8.997 11.996 12.879 14.152 -9.0
Russia 8.610 11.480 8.930 6.171 44.7
UK 7.789 10.385 10.274 8.967 14.6
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a = actual 2005 cumulative. b = annualized.
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