January 2018 Trade Balance

As the earliest data on 2018 trade trickles in, Atlas is reminded of deceleration.  According to the Bureau of Economic Analysis (BEA), America’s trade deficit worsened to $56.6 billion in January 2018.  Adding to the dour tone of this release, December’s shortfall intensified to $53.9 billion (originally $53.1 billion).  Since net exports are added to the other components of gross domestic product (GDP), a growing shortfall subtracts more from the total.  Components of trade were mixed.

Imports held steady at $257.5 billion.  Industrial supplies increased $2.0 billion to $47.3 billion.  Likewise, petroleum imports rose $2.2 billion, reflecting increases in both volume and price.  Interestingly, these were offset partially by fewer foreign-made consumer goods passing through ports in January. 

Falling exports were influenced by a decline in goods, while services held steady.  Foreign purchases of primary metals fell $1.3 billion.  Additionally, capital goods declined $2.6 billion as companies beyond American borders slowed their investment in equipment; $1.8 billion of this drop was from fewer civilian aircraft exports.

This iteration of trade balance is another example of the economy’s slowing pace.  December’s revised tally will weigh down the output total in the final quarter of 2017; look for our note on the final revision to Q4 2017 GDP in early April after the BEA’s release.  Our current quarter is not off to a good start from the vantage point of America’s trade deficit.  January’s total is the worst level in nearly a decade; the shortfall in September 2008 was $60.2 billion, and our economy was in the middle of the Great Recession.  Other components of GDP are already slowing; growing trade deficits will only exacerbate the deceleration.