Posted on 05/11/2005 5:39:05 AM PDT by RWR8189
WASHINGTON (Reuters) - The U.S. trade deficit narrowed unexpectedly to $55.0 billion in March in the largest monthly drop in over three years, as exports rose to a new record and clothing and other imports from China declined, a U.S. government report showed on Wednesday.
The 9.2 percent plunge in the deficit defied Wall Street forecasts. Analysts had expected high oil prices and a flood of clothing from China to push the monthly trade gap to around $61.5 billion, which would have been a new record.
The sharp pullback in imports offered further evidence that the economy hit a soft patch early in the year, but more recent reports have shown renewed strength.
Imports of clothing, textiles and related goods from China fell 21.2 percent during March after a 9.8 percent increase in February. But imports of those products in the first three months of the year are 54 percent higher than last year, as the result of a surge in January when quota restrictions on textile imports expired.
Total imports from China declined 4.4 percent to $16.2 billion in March. That helped cut overall imports by 2.5 percent to $157.2 billion - the largest monthly drop since December 2001, the same as the trade gap.
Although imports from other major trading partners such as Canada, Mexico and the European Union rose during March, the overall tally declined as China and smaller trading partners shipped fewer consumer goods, autos and auto parts, capital goods and industrial supplies to the United States
March oil imports were the second highest on record and average prices for imported crude jumped $4.29 per barrel during the month - the largest increase in nearly 15 years.
U.S. exports, led by increased shipments of capital goods and food, feeds and beverages, hit a record $102.2 billion. U.S. exports to Canada and the European Union set record highs.
In current dollars about $12.2 trillion.
Here's the full monthly report from the Census Bureau ( http://www.census.gov/foreign-trade/statistics/highlights/monthly.html). You can find the petroleum deficit of $17.0 billion mentioned in the Census Goods section near the middle as a bullet point.
Monthly Trade Highlights
March 2005 Highlights
This page shows the Balance, Exports and Imports for the current month and prior month, along with the percent change and dollar change between the two. The last column of the table shows the last time the percent change (or dollar change) was larger. Some interesting facts about this month's International Trade in Goods and Services report can be found at the bottom of the page.
Goods and Services on a Balance of Payments (BOP) Basis, seasonally adjusted - series began with January 1992 statistics.
All Values in billions of dollars
Percent Change from Prior Month
March 2005 (Billions of $) February 2005 (Billions of $) Percent Change from Prior Month Last time the Increase/Decrease in Percent Change was larger/When it Occurred Goods and Services Balance -$55.0 -$60.6 -9.2% -10.3% from November 2001 to December 2001 Exports $102.2 $100.7 1.5% 3.2% from November 2004 to December 2004 Imports $157.2 $161.3 -2.5% 2.9% from November 2001 to December 2001 Goods (BOP Basis) Balance -$59.4 -$64.6 -8.0% -8.3% from November 2001 to December 2001 Exports $72.1 $71.1 1.4% 4.4% from November 2004 to December 2004 Imports $131.5 $135.7 -3.1% -3.9% from November 2001 to December 2001
Dollar Change From Prior Month
March 2005 (Billions of $) February 2005 (Billions of $) Dollar Change From Prior Month Last time the Increase/Decrease in Dollar Change was larger/When it Occurred Goods and Services Balance -$55.0 -$60.6 -$5.6 -$5.8 from January 2001 to February 2001 Exports $102.2 $100.7 $1.5 $3.1 from November 2004 to December 2004 Imports $157.2 $161.3 -$4.1 -$5.8 from January 2001 to February 2001 Goods (BOP Basis) Balance -$59.4 -$64.6 -$5.2 -$5.5 from January 2001 to February 2001 Exports $72.1 $71.1 $1.0 $3.0 from November 2004 to December 2004 Imports $131.5 $135.7 -$4.2 -$5.1 from January 2001 to February 2001
- March exports of goods and services ($102.2 billion) and March exports of goods ($72.1 billion) were records.
- March exports of services ($30.1 billion) and imports of services ($25.7 billion) were records.
Goods on a Census Basis (seasonally adjusted)
Deficit
- The March petroleum deficit ($17.0 billion) was the second highest on record. The record ($18.0 billion) occurred in November 2004.
Exports
- March exports of $73.0 billion were a record.
- March exports of consumer goods ($9.5 billion) were a record.
- March exports of foods, feeds and beverages ($5.0 billion) were the highest since November 2003 ($5.0 billion).
- March exports of capital goods ($29.1 billion) were the highest since March 2001 ($29.1 billion).
Imports
- March imports of petroleum ($18.9 billion) were the second highest on record. The record ($19.6 billion) occurred in November 2004.
Country and other highlights (Census Basis, not seasonally adjusted)
- March exports to Canada ($18.9 billion) and imports from Canada ($23.9 billion) were records.
- March imports from Mexico ($14.1 billion) were the second highest on record. The record occurred in October 2004 ($14.5 billion).
- March exports to the European Union ($16.9 billion) and imports from the European Union ($26.2 billion) were records.
- The March deficit with Japan ($7.8 billion) was the highest since October 2000 ($8.5 billion).
- March imports from Japan ($12.8 billion) were the highest since October 2000 ($14.1 billion).
- March exports to China ($3.3 billion) were the highest since March 2004 ($3.4 billion).
- March exports to the NICs ($8.0 billion) were a record.
- March exports to South/Central America ($6.0 billion) were the highest since October 1997 ($6.1 billion).
- March imports from South/Central America ($10.1 billion) were a record.
- The February to March increase in the average price per barrel of crude petroleum ($4.29) was the largest month to month increase since the September to October 1990 increase ($4.45).
So by removing the petroleum deficit at $17.0 billion, the goods deficit would have been $42.4 billion rather than $59.4 billion. Annualizing the sans-oil figure by multiplying by 12 months, that would give an estimated annual trade deficit of $509 billion for goods rather than the $712 billion implied from estimating with 12 months of $59.4 billion.
Yup, sho' 'nuff, it's Bush's fault!!!
Do you have any evidence of that? My point was that no matter which direction the trade deficit goes, the tariff free traders argue it is good news. Failing that they say it doesn't matter. Reminds me of how kids make rules - I win.
Let's be clear here, in economics there truly is no such thing as a free lunch because there's always an opportunity cost or alternative that has its own sets of pros & cons. If the board's protectionists are seemingly always discussing the cons of an economic activity (or outcome), who do you suppose is going to provide the balance (and education) to the discussion? That's why I used to engage you but now it's lost its fun for me I'd been reduced to being a broken record.
I, myself, have grown tired of the arguments and have stopped participating. I have my own preference on the trade issue and if I had to choose between deficit and surplus in the current account, I'd choose deficit. I'd choose deficit because it would mean, through an accounting identity, that our capital account would be in surplus and, since foreigners typically buy our debt instruments (relative to the proportions of equity securities and property assets they buy), they fund our economic expansion...that is until the cycle is broken and the trend does a 180.
Sixmil, I have found myself on the other side of many discussions with you and I don't think that you are informed enough about the benefits of free(er) trade. Please consider reading a very short book - done in a story-telling format - that will help for you to see (if only briefly) the other side of the argument. If you'd like, I'll offer the book for sale for $.50 on Amazon.com Marketplace. When I send you the book, if you choose to purchase it, I'll enclose five bucks for your efforts (and to offset the transaction costs & shipping that arise). You'll have to send me a private message through FR so that we can set up a time for me to offer it for sale because I want to know that it'll be you that "let the book go" to at that price and with five bucks inside.
The book's info can be found here. I look forward to hearing from you one way or the other. Make sure to check out the reader reviews to see if this even interests you.
BTW, in response to Toddsterpatriot's post. It may be that they've stopped buying our debt and we've been the ones slowing our buying from them. There are many possibilities that will clear themselves up for you if you were to read about them.
Actually, if a falling trade deficit gets one protectionist to shut up, just one, it's significant progress.
Any evidence that other countries are buying? Gosh, this is easy. From the article: U.S. exports, led by increased shipments of capital goods and food, feeds and beverages, hit a record $102.2 billion.
If U.S. exports are at a record high, foreign purchases of U.S. exports are at a record high.
My point was that no matter which direction the trade deficit goes, the tariff free traders argue it is good news.
You misunderstand, I don't think a trade deficit is a bad thing. The foreign sellers get dollars which must be redeemed at some point. When they buy our goods that reduces our trade deficit and provides jobs and profits for our people and companies. That's a good thing. When they buy our debt that reduces our interest rates and that's a good thing. When they buy our equities they provide capital which allows our businesses to expand production and increase hiring and that's a good thing.
I just don't see the downside in any of these activities. Maybe you can find one for me?
Do you ever wonder how organizations such as the ISM can report that U.S. export orders have been rising for 40 consecutive months, and folks here still think we don't export anything at all, or ask for evidence that we are?
I attribute it to public school math skills.
I'll shut up when it gets to zero. Small aberations in a downward trend don't really mean anything, and they should mean even less for someone who thinks trade deficites are meaningless or good.
I sail out of the port of LA every weekend and I see very little going out besides scrap steel. It's hard to imagine this is the trade activity of an advanced nation.
Why are surplus and deficit the only choices. If I threw in a 3rd choice - balanced trade - would you still choose deficits?
I think I am informed on the benefits of trade. The benefits of trade deficits however, still elude me. Does this Ricardo -does-Broadway book explain the benefits of large and growing trade deficits? If memory serves, I don't think any of the classic free traders embraced or even imagined the scenario people on your side call free trade.
I asked for evidence that "other countries are finally buying." You seem to suggest they were holding out for something, perhaps a cheaper dollar?
What is there such a fucking problem understanding this concept?
Why are surplus and deficit the only choices. If I threw in a 3rd choice - balanced trade - would you still choose deficits? ~ sixmilSo, let's recap: 1) You cannot make other countries buy your goods and services; especially if they have no use for them or there utility functions are not being satisfied by what they'd be spending. 2) Trade balance (or in-balances) are a misnomer. Trade is always balanced when the relevant account are weighed on the double entry accounting style balance sheet. 3) Are you interested in the book or not?
Well we finally stopped setting a record deficit every month, great. But we are still running at a 600 billion/year pace. One data point does not make a trend, this is a pleasent surprise but until we have a trend that's abput all, a pleasent surprise.
The falling real wages in the usa might be the cause of this surprise as much as any thing else. Just don't know yet, but I seriously doubt this is the begining of a rebith of manurfacturing and high wage jobs in the usa. If it is then I will celebrate.
The graph I posted above is to a protectionist what garlic is to a vampire.
Countries hold out for a cheaper dollar so that their own domestic industries get hammered? You are not making any sense.
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