Trade deficit numbers tell an interesting story
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By now, you have probably seen the most recent batch of numbers from the Commerce Department regarding the trade deficit.
In short, the data pretty much represents an ongoing trend. Commerce said that the international trade deficit increased 5.9 percent in December 2010, to $40.6 billion, up from $38.3 billion in November. And exports grew 1.8 percent, to $163.0 billion, and imports rose 2.6 percent, to $203.5 billion.
These figures match up with what was expected for the most part, too, so there are no huge surprises being thrown at us on this sunny (but chilly) Friday.
A closer look at the numbers tells us a few other interesting things as well. December exports were up $2.8 billion compared to November’s $160.1 billion and imports were $5.1 billion ahead of November at $198.5 billion.
As the trade deficit increases, we continue to hear various tidbits of good news about how the economy is coming back and things are shaping up. That is all good and well, and I like to take an optimistic route as much as anyone, but are things truly as they seem in this case?
Some people think so. Look at the comments below from IHS Global Insight U.S. Senior Analyst Gregory Daco when dissecting full-year 2010 data:
“Trade volumes have almost fully recovered from the Great Recession trough, increasing 12% in 2010. The trade deficit rose from $374.8 billion in 2009 to $497.8 billion this year as the U.S. recovery pulled in more imports. Looking forward, strong emerging markets growth and a historically weak dollar should boost U.S. exports and help offset imports growth, thereby keeping a lid on the trade gap. The trade deficit with China fell strongly to $20.7 billion in December (a traditional surplus month) from $25.6 in November. For the whole year the deficit vis-à-vis China stands at $273.1 billion, much higher than the Great Recession trough of $226.9 billion in 2009, but only slightly greater than the 2008 gap of $268.0 billion.”
Daco appears to be optimistic in the prospects for a global economic recovery. But on the domestic side, I am still not convinced the tides are fully turning.
Need some proof? Look no further than housing and unemployment figures. Data for both items is still disturbingly low, with no clear cut evidence they will be improving in a hurry.
Despite these drags, we do see improving freight volumes to a certain degree, especially with truck tonnage, rail/intermodal data and port throughput in certain lanes.
Perhaps some of this has to do with us still dealing with the after effects of the recession, and maybe part of it has to do with the fact that us Americans appear to be spending more and saving less, a sharp about face from what was occurring mere months ago.
While things are better than they were a year ago, myriad challenges remain. As I have written in this space before, it does not take much to create a scenario in which current trends can change quickly. As an example of this, check out the price of fuel. It is going up…fast. And should this increase continue, it could very likely be all we are talking about by Memorial Day i.e. a 2008 redux. But we will have to wait and see what happens between now and then.
Most shippers and carriers are feeling relatively good about where things stand at the moment. But it stands to reason this is a guarded approach without a doubt. Until we see the sustained growth truly required to give us the confidence needed to fully buy in to a meaningful economic recovery, we will likely continue to have an “all hands on deck” approach to today’s economic realities until then.
About the AuthorJeff Berman Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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