MW: U.S. trade deficit sinks to nearly two-year low
Surging exports of oil and airplanes lowers gap to $38.5 billion
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The monthly U.S. trade deficit fell almost 21% in December to the lowest level in two years, pulled down by a surge in petroleum exports and commercial jetliners.
The trade gap plunged to a seasonally adjusted $38.5 billion from $48.6 billion in November, the Commerce Department said Friday. It’s the smallest trade gap since January 2010.
Economists polled by MarketWatch had forecast the deficit to drop to $45.5 billion. The sharper-than-expected decline almost certainly means the U.S. economy actually grew in the fourth quarter instead of contracting 0.1% as initially reported.
That’s because the trade deficit for the October-to-December period is not as big as the government had estimated in its preliminary report last week on gross domestic product. Lower trade deficits add to U.S. economic growth; bigger gaps are a subtraction.
In December, U.S. exports climbed 2.1% to $186.4 billion, perhaps further evidence that overseas economies are recovering from a global slowdown in much of 2012. Demand for U.S. goods picks up when other nations are growing.
One caveat: exports were essentially flat excluding petroleum.
U.S. exports of large aircraft and nonmonetary gold were particularly strong, according to government figures.
At the same time, imports declined 2.7% to $224.9 billion — the biggest drop in three years.
The lower deficit was driven by a marked change in the usual flow of petroleum. The U.S. exported a record $11.6 billion in petroleum products, but crude imports by the barrel tumbled to the smallest amount since 1997.
The U.S. still imported far more petroleum than it exported, but the gap, at $18.7 billion, fell to the lowest level since summer 2009.
What’s unclear is whether the change in petroleum flows in December is an aberration or the hint of a developing long-term trend. The U.S. is becoming an even bigger producer of crude and refined oil as a result of new technologies that allow companies to extract previously inaccessible fuel from large rock formations, a process known as fracking.
“U.S. domestic energy production is becoming an increasingly important part of the global re-balancing theme,” said Neil Dutta, head of economics at Renaissance Macro Research.
The U.S. has also become more efficient in its use of fuel, as reflected by the growing sales of hybrid vehicles and automobiles that get better gas mileage.
Deficits with most of the nation’s biggest trading partners fell.
The U.S.’s trade gap with China decreased to $24.5 billion from $29 billion in November, for example, while the deficit with the European Union slid to $8.7 billion from $12.2 billion.
Jeffry Bartash is a reporter for MarketWatch in Washington.
