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Goods Trade Deficit Hits Another New Record as Exports Sink While Imports Rise

US balance of trade took a sharp decline to another new low in January.
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Goods balance of trade from Census Department, chart by Mish

Goods balance of trade from Census Department, chart by Mish

Advance International Trade in Goods

  • The international trade deficit was $107.6 billion in January, up $7.2 billion from $100.5 billion in December. 
  • Exports of goods for January were $154.8 billion, $2.8 billion less than December exports. 
  • Imports of goods for January were $262.5 billion, $4.4 billion more than December imports.
  • The goods deficit widened by 7.2%

Goods and Services 

Goods balance of trade from Census Department, chart by Mish

Goods balance of trade from Census Department, chart by Mish

The Advance Report from the Census Bureau only includes goods. The US runs a small surplus in services but this is ugly.

Gross Domestic Product

Gross domestic product (GDP) is the total market value, expressed in dollars, of all final goods and services produced in an economy in a given year.

For accounting purposes, exports add to GDP and imports subtract so this data in isolation will subtract from GDP estimates. 

In practice, imports do not subtract from GDP. 

The key word is "domestic".

Imports are not domestic. Shouldn't they be subtracted?

The answer is only if they were incorrectly totaled in the first place.

Think Imports and Trade Deficits Impact GDP? Think Again!

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For discussion of imports as related to GDP, please see Think Imports and Trade Deficits Impact GDP? Think Again!

The current textbook and classroom treatment of how international trade is measured as part of GDP can lead to misconceptions if not properly explained.

Yet, imports need to be subtracted because sales were incorrectly totaled as domestic.

So, in isolation, GDP estimates will fall on this data.

Trump's "Historical Trade Deal" With China Final Results Are a Big Zero

The results of President Trump's historical trade deal with China are in. 

In case you missed it, please see Trump's "Historical Trade Deal" With China Final Results Are a Big Zero

In January 2020, former President Donald Trump signed a trade deal that committed China to purchase an additional $200 billion of US exports over 2020-21. The data are now in. In the end, China bought none of that extra $200 billion.

This post originated on MishTalk.Com.

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