"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Thursday, March 10, 2011

International Trade

This report, looking at the US trade surplus (or, more likely, deficit), is one of the more important economic reports from the perspective of the market.  It relates directly to GDP, which is a measure of the value of all goods and services produced within the United States.  If we have a surplus (or a shrinking deficit), that indicates increased international demand for US-produced goods, which points towards a growing GDP.  On the other hand, if we have an increasing deficit, that is a harbinger of ill tidings for GDP.
 
For December 2010 (and yes, there is a two month lag on this data), the US had a $40.6 billion trade deficit.  For January, the Econoday-surveyed analysts are expecting that trade gap to widen a bit to a $41.0 billion deficit.  For the actual results, we turn to the joint US Census Bureau/US Bureau of Economic Analysis press release, which shows that we missed analyst expectations by a substantial amount.  Instead of the expected $41.0 billion goods and services deficit that was expected, the deficit widened to $46.3 billion.  Total imports of goods and services came in at $214.1 billion for January, while total imports came in at $167.7 billion.  The good news here is that January exports did increase by $4.4 billion (indicating increased international demand).

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