As usual, whenever the monthly U.S. jobs reports and the monthly U.S. trade reports come out on the same day, the latter get overshadowed. Partly this is because the trade data is released with a two-month time lag, versus one month for employment. But it’s also partly because, despite all the paeans offered to globalization and its blessings by the political, business, and media establishments, the trade figures have become so depressing that they’re considered best neglected in hopes that Main Street won’t notice.
So chances are you haven’t yet read or heard that the overall January trade shortfall increased 2.19 percent on month, from $44.70 billion to $45.68 billion. Or that this January combined goods and services deficit was the highest since August’s $50.54 billion. These figures aren’t adjusted for inflation, so it’s tough to tell exactly how much of a drag on economic growth they’ll produce, but all the signs keep pointing to one that will keep getting bigger and bigger.
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Also noteworthy: That portion of the trade deficit most heavily influenced by trade deals and related trade policies – the non-oil goods deficit – also hit its highest level in pre-inflation terms ($57.76 billion) since August ($59.29 billion). So did its inflation-adjusted counterpart.
Not that the January trade report was devoid of bright spots. The deficit in manufactures fell from December’s $69.19 billion to $65.44 billion, and the gap in high tech goods dove to its lowest level ($4.98 billion) since February ($3.13 billion). Further, the $4.64 billion oil deficit represented its second lowest level since April, 1999, as imports ($11.19 billion) were lower than in any month since November, 2003 ($10.78 billion).
But what really stood out in the numbers to data mavens were the revisions of December results – they were humongous by their usual standards, and created significant changes in the full-year 2015 results. Here are some of the main examples:
>The December goods and services trade deficit was revised up by a stunning 3.09 percent. And this upgrade followed an almost as unusually large 2.32 percent upward revision in the November shortfall.
>Largely as a result, the full-year 2015 total trade deficit came in at $539.76 billion – 1.55 percent higher than the originally reported $531.50 billion. This figure was 6.18 percent bigger than the 2014’s trade deficit, not 4.56 percent greater. And whereas the first 2015 data pegged that year’s combined trade deficit as the biggest since 2012, the revisions make it the biggest since 2011.
>The key to the December revisions was services trade – which has been in surplus annually, and therefore a winner for the U.S. economy, since 1971.
>The December services surplus was still big as a result of the revisions reported today – $17.90 billion. But the previously reported number was a good deal larger – $19.16 billion. That’s a difference of an immense 8.27 percent!
>December services exports were revised down 1.59 percent, from $60.34 billion to $59.38 billion. Imports for the month, meanwhile, were revised up 0.72 percent, from $41.19 billion to $41.48 billion.
>For the full year, services exports were revised down 0.87 percent, from $716.43 billion to $710.17 billion. As a result, rather than rise year-on-year by 0.83 percent, they fell. And though the decline was a tiny 0.06 percent, it represented the first annual drop since the recession year 2009.
>Full-year services imports were revised up 0.33 percent, from $489 billion to $490.61 billion. As a result, they rose year-on-year by 2.76 percent, not by 0.33 percent.
>The impact on the full-year, 2015 services surplus was profound. Initially reported at $227.43 billion, it was downgraded this morning to $219.55 billion. That’s 3.46 percent lower. And therefore, this 2015 total was not 2.45 percent less than 2014’s, but 5.83 percent. Given that this year-on-year drop was the first since 2003, the change becomes even more significant.
The much larger goods trade totals for December and full-year 2015 were revised, too – mainly negatively – but these changes were dwarfed by the services revisions. But the government’s revising exercise isn’t done yet. The latest changes don’t seem to have been incorporated yet into more detailed data series, like those that track trade by country and sector. I’ll be keeping an eye out for them, and report the results as soon as I can!