January’s Trade Balance

The U.S. Trade Balance widened to start the year according to the Bureau of Economic Analysis.  The trade deficit was $44.4 billion to begin 2013 after ending 2012 with a revised shortfall of $38.1 billion versus the initial count of $38.5 billion.  The chasm is smaller than a year ago when it was $52.3 billion.  The 12 month average deficit improved over December’s reading, falling from $44.96 billion to $44.31 billion.

The gap widened to start the year because exports fell and imports increased.  America’s trading partners purchased $2.2 billion less than in December.  On the other hand, Americans spent $4.1 billion more to begin the new year than was the case to close out 2012.  The slowdown in exports primarily reflects a slip in the demand for American made industrial supplies and materials; meanwhile, almost all of the increase in imports came from the same category of industrial supplies and material.  One notable trading deficit increase came from the surge with OPEC countries; this gap widened by 88 percent for the month growing from $3.4 billion to $6.4 billion.

Annual trade deficits have been the norm in America since 1976, but the average monthly deficit has been lower ($42.509 billion in the last 44 months) after the Great Recession than in the 44 months prior to the down turn which averaged $58.490 billion. The impact of 2008’s global slowdown is continuing to be felt and will continue to reverberate through the economy for an unknown period of time.  Lower trade deficits in America may be one manifestation of the contraction’s influence.    (by C. Cox)