US Trade Balance Due at 8:30AM
August 11, 2010 by Lawrence Fayman · Leave a Comment
US Trade Balance due at 8:30 AM. Watch the Inflation Adjusted figure.
February 11, 2009 by Greg Michalowski · Leave a Comment
The US Trade Balance for December is due at 8:30 AM. The expectation is for the Trade Balance to improve to -35.7B from -40.4B. The gains over the last few months are due to lower imports due to slower growth and lower oil prices – with lower oil prices being the most influential.
A lower Trade Balance is a positive for GDP. However, the inflation adjusted Trade Balance is the figures that are most important as this is the figures the government uses for GDP. The chart below shows the Real or inflation adjusted GDP (Red line) vs the Nominal Trade Balance (Blue line). As the price of oil has declined (since July 2008), the Nominal Trade balance has quickly risen and is nearly equal to the Real Trade Balance now. Moreover the Real Trade Balance has leveled off since July. Lower prices of oil and commodity imports are the main factor.
Back when oil prices were higher and the dollar much lower, the Trade Balance was contributing to GDP even though the headline Trade Balance did not improve (the Red line was increasing) . The reason was exports were increasing due to the lower dollar. Now that the dollar is stronger and global growth as declined dramatically, the export gains are not as great. As a result, the Real Trade Balance has stabilized (red line is not going higher).
The point is, although the gains have been dramatic in the headline Trade Balance, the effects on GDP are not as great as one would think. It’s the Real Trade Balance that is most important for GDP growth.
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