Friday, October 14, 2005
Maybe the trade deficit wasn't that bad?
Brad Setser has a very interesting point to make about our trade deficit. After you factor in oil prices, the news looks quite good.
Which means as well that as oil prices stabilize from here, the trade deficit should begin to shrink. And China's trade surplus is beginning to shrink?
Year to date, non-oil imports are up by 10.4%, that is, non-oil imports through august 2005 are 10.4% higher than imports through august in 2005. But all that growth reflects a surge in imports (a huge surge) at the end of last year.
Non-oil goods and services imports in January: $144.2 billion
Non-oil goods and services imports in August: $144.6 billion
If only the US petroleum import bill (seasonally adjusted) had not increased from $16.6 to $22.6 during the same period ...
August exports were over 12% higher than August exports a year ago, and August non-oil imports were only 7% higher than a year ago. If that is sustained, such a differential would be enough to at least stabilize the non-oil trade deficit.
Which means as well that as oil prices stabilize from here, the trade deficit should begin to shrink. And China's trade surplus is beginning to shrink?
