What Drove the Sharp Reduction in U.S. Trade Deficit
Author:
Walter Kurtz
Location: Tokyo
Date: 2013-02-12
Some folks in the media are making a big deal out of the US trade deficit decline in December. The SF Chronicle: - Number of the day: 20.7 percent
Yes, that's an impressive showing indeed. But let's take a look
at the chart, because such numbers should not be viewed in
isolation. The decline in deficit follows a sharp increase a month
earlier. The deficit increase in November was driven by hurricane Sandy, and was exacerbated by the Northeast US refineries' shutdowns. Fuel output in November dropped materially. The lower imports in December are therefore distorted by the reversal of the "Sandy effect". Trade deficit excluding fuel in fact declined less sharply than the overall number in December. This is clearly a welcome result, but the real trend will not be fully visible until the January numbers are out.
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