Summary
Last Thursday (3/9), the Commerce Department reported that the January trade deficit rose to a record $68.5 billion. This was about $3.4 billion or 5.3% above December's revised red ink of $65.0 billion.
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General Observations
* The January trade deficit (goods and services) came in at $68.51 billion, a record. The consensus forecast for January had contemplated a trade gap of around $66.5 billion.
* Five of the six largest monthly trade deficits have occurred over the last five months, per the following table:
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SIX LARGEST MONTHLY
TRADE DEFICITS
(Goods and Services)
---------------------------
Amount
Year Month (Bils.)
--------------------------
2006 January $68.513
2005 October $67.836
2005 September $65.585
2005 December $65.074
2005 November $64.462
2005 February $60.114
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* The January deficit was up a sizable $3.44 billion or 5.3% from December's revised shortfall of $65.07 billion (originally reported at minus $65.68 billion).
* The January deficit was the result of total imports of $182.88 billion, $6.24 billion or 3.5% more than revised December imports of $176.64 billion. Meanwhile, January exports totaled $114.37 billion, $2.81 billion or 2.5% above December's revised exports of $111.56 billion.
* With last week's report came revisions not only to December data, but also to all the other months falling in 2005. The latest revisions had the effect of reducing last year's total deficit by $2.14 billion. This is in addition to the $1.70 billion reduction reported in February, when the December data were initially released.
US Trade Deficit (Goods and Services)
-- Results Through Report Dated 3/09/06
-----------------------------------------------
2005 2005
Revised Prior 2004 Y/Y
-------- -------- -------- -----
December $ 65.074 $ 65.677 $ 54.672 19.0%
November $ 64.462 $ 64.694 $ 58.977 9.3%
October $ 67.836 $ 67.909 $ 55.574 22.1%
-------- -------- -------- -----
4th Quart. $197.372 $198.280 $169.223 16.6%
-------- -------- -------- -----
September $ 65.585 $ 65.776 $ 51.939 26.3%
August $ 58.462 $ 58.766 $ 54.195 7.9%
July $ 57.355 $ 57.597 $ 51.331 11.7%
-------- -------- -------- -----
3rd Quart. $181.402 $182.139 $157.465 15.2%
-------- -------- -------- -----
June $ 59.130 $ 59.205 $ 54.894 7.7%
May $ 55.971 $ 56.046 $ 48.742 14.8%
April $ 57.618 $ 57.692 $ 48.406 19.0%
-------- -------- -------- -----
2nd Quart. $172.719 $172.943 $152.042 13.6%
-------- -------- -------- -----
March $ 53.745 $ 53.836 $ 46.966 14.4%
February $ 60.114 $ 60.203 $ 45.834 31.2%
January $ 58.267 $ 58.357 $ 46.053 26.5%
-------- -------- -------- -----
1st Quart. $172.126 $172.396 $138.853 24.0%
-------- -------- -------- -----
Year $723.619 $725.758 $617.583 17.2%
======== ======== ======== =====
* Over the 10 years ended 2005, the US trade deficit totaled a whopping $3.64 trillion.
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THE 10-YEAR HISTORY OF THE U.S. TRADE DEFICIT
(Goods and Services)
-----------------------------------------------
Trade Index
Deficit Cumulative 1995=
Year (Bils.) Y/Y From 1996 100.0
-------------------------------------------
2005 $723.619 17.2% $3638.975 750.77
2004 $617.583 24.8% $2915.356 640.75
2003 $494.814 17.5% $2297.773 513.38
2002 $421.180 16.1% $1802.959 436.98
2001 $362.729 -4.1% $1381.779 376.34
2000 $378.272 43.6% $1019.050 392.46
1999 $263.394 59.6% $ 640.778 273.28
1998 $165.009 52.3% $ 377.384 171.20
1997 $108.310 4.1% $ 212.375 112.37
1996 $104.065 8.0% $ 104.065 107.97
-------------------------------------------
1995 $ 96.384 <----------------------->
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* The last year the United States ran a trade surplus was 1975, in which a positive $12.40 balance was recorded. However, the trade balance fell back into deficit in 1976 (minus $6.08 billion), and it has remained in the red in every year since.
The Crude Oil Data
* As the table below indicates, the value of January crude oil imports totaled $15.72 billion, up about $0.2 billion from December's $15.50. The modest decline was the net result of a 2.6% drop in import volume accompanied by a 4.4% rise in price per barrel ($51.93 per barrel in January, versus $49.76 per barrel in December).
* The monthly record for import volume was 344.7 million barrels, occurring in June of 2004. This was almost 42 million barrels or 13.8% higher than January's 302.8 million barrels.
* Crude oil imports were equal to 8.6% of total imports in January, a very negligible decline from December's 8.7%.
* For all of 2005, crude oil imports totaled $175.6 billion, up almost $44 billion or 33.3% from 2004. This equaled about 8.8% of total imports (versus 7.5% in 2004), and it was equal to 10.5% of goods-only imports of $1674.3 billion.
(NOTE: The above calculations take license with some mixing seasonally adjusted and seasonally unadjusted data. For the purpose at hand, the distortion in not significant.)
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TOTAL U.S. IMPORTS AND CRUDE OIL IMPORTS*
-----------------------------------------------
Crude Oil Imports**
Total -----------------------
Imports# Barrels Value Avg. Crude/
Year/ -------- -------------- Price Total
Month (Amounts in Billions) Per Bbl. (%)
-----------------------------------------------
2006
Jan. $ 182.884 0.303 $ 15.725 $51.93 8.6
===============================================
2005
Dec. $ 177.636 0.311 $ 15.501 $49.76 8.7
Nov. 173.647 0.314 16.397 52.16 9.4
Oct. 175.208 0.304 17.140 56.29 9.8
Sep. 171.525 0.278 15.962 57.32 9.3
Aug. 166.862 0.326 17.155 52.65 10.3
July 164.027 0.312 15.298 49.03 9.3
June 164.867 0.328 14.578 44.40 8.8
May 161.561 0.319 13.726 43.08 8.5
Apr. 163.228 0.314 14.045 44.76 8.6
Mar. 156.468 0.326 13.410 41.14 8.6
Feb. 161.421 0.297 10.942 36.85 6.8
-----------------------------------------------
Jan. $ 160.388 0.323 $ 11.410 $35.55 7.1
-----------------------------------------------
2005 $1995.839 3.753 $175.563 $46.78 8.8
2004 $1769.031 3.821 $131.743 $34.48 7.5
2005 Versus 2004
---------------------------------
$ $ 226.801 -0.068 $ 43.820 $12.30
% 12.8% -1.8% 33.3% 35.7%
===============================================
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
-----------------------------------------------
*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%, 2005 = 10.5%. Columns may not
add due to rounding.
-----------------------------------------------
What would the trade deficit have looked like in 2005 if the United States neither imported nor exported any crude oil?
Employing the figures in the above tables (remembering there is some mixing of seasonally adjusted and unadjusted data), the absence of oil imports would have produced a 2005 deficit of $548.0 billion, $175.6 billion or 24.3% lower than the reported $723.6 billion.
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 Jan. Size. Amounts
in Billions of $s and Are
Not Seasonally Adjusted)
--------------------------------
2006 2005
Country/ --------------------
Region Jan. Dec.
--------------------------------
China 17.911 16.299
Canada 8.933 8.039
OPEC 8.448 7.568
Japan 6.452 6.800
Mexico 4.637 4.263
Germany 3.961 4.517
Taiwan 1.600 1.069
Italy 1.589 1.442
Korea 1.339 1.093
Russia 0.988 1.112
UK 0.680 1.179
----------------------------------------------------
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)
----------------------------------------------------
% Change
------------
Country/ 2005/ 2004/
Region 2005 2004 2003 2004 2003
----------------------------------------------------
China 201.626 161.938 124.068 24.5 30.5
OPEC 92.732 71.843 51.065 29.1 40.7
Japan 82.682 75.562 66.032 9.4 14.4
Canada 76.522 66.480 51.671 15.1 28.7
Germany 50.663 45.850 39.281 10.5 16.7
Mexico 50.149 45.067 40.648 11.3 10.9
Italy 19.496 17.413 14.854 12.0 17.2
Korea 16.109 19.756 13.157 -18.5 50.2
Taiwan 12.789 12.879 14.152 -0.7 -9.0
UK 12.435 10.274 8.967 21.0 14.6
Russia 11.336 8.930 6.171 26.9 44.7
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