Chart of the Week: December US trade balance suggests upward revision to Q4 GDP
The US trade balance narrowed sharply in December, highlighting the country’s increasing energy independence. The data suggest that the advance estimate of GDP in the fourth quarter, which was released at the end of January and showed the first fall in output for more than three years, is likely to be upwardly revised.
The US trade balance fell by $10 billion in December as exports growth outpaced imports growth, in nominal and percentage terms, for the first time since 2007. Across 2012 as a whole, the trade deficit totaled $542 billion, down from $562 billion in 2011. The pre-recession high, set in 2006, was $750 billion. Exports expanded by $97 billion to a record $2.2 trillion, or 13.9% of GDP – tying a record set in 2011.
US trade in petroleum products was particularly encouraging. The petroleum trade deficit fell $4.7 billion to $18.7 billion – its lowest level since 2009, when imports were artificially restrained by weak cyclical demand. This time, the drop in imports is more likely to reflect improvements in domestic energy production, suggesting a more permanent improvement in the underlying US trade position.
The better than expected figure suggests the advance estimate of Q4 GDP, which showed a -0.1% fall (AR), is likely to be revised up. Further ahead, the outlook for US exports may be helped as demand for foreign energy declines. Exports, meanwhile, should pick-up if the global recovery remains on track.