|
|
| Commentary on the October 2001 Trade Figures |
|
Tuesday, December 25th, 2001
|
America�s monthly trade deficits (goods and services basis):
October 2001 $29.4 billion
September 2001 $19.0 billion
October 1999 $24.2 billion
October 2000 $34.0 billion
During the East Asian financial crisis of 1998 American economic commentators suavely assured us that America�s then soaring trade deficits were not a sign of weakness but rather of strength. America�s imports had surged because the U.S. economy was booming at a time when many nations were struggling. Thus the big deficits of that year (up more than 70 percent in the space of two years) were supposed to be a temporary excess. As such they would assuredly soon be corrected once the U.S economy went off the boil.
Well the U.S. economy has now well and truly cooled but, guess what, the big trade deficits are still with us. And how. The October goods-and-services deficit at $29.4 billion was one of the worst monthly trade performances in history. True, it represented a decline of 15 percent on the all-time record of $34.5 billion incurred in September 2000. But to see the October figure in proper context, you should remember that the highest monthly deficit ever recorded before 2000 was $25.5 billion (in November of 1999). And 1999 was of course a boom year for the U.S. economy, when by tradition imports are supposed to be at a cyclical high.
All in all we are headed for a goods and services deficit for calendar 2001 close to my forecast of $350 billion. That would be a fall of a mere 7 percent on the all-time record of $376 billion incurred in 2000. As for the current account (which is a wider measure than goods and services and is the one that economists regard as the more meaningful), it looks like we are headed for a deficit of about $420 billion for 2001 � compared with about $450 billion in 2001. In other words, the current account is likely to represent about 4.2 percent of GDP this year. That would be a reduction compared to the shocking new record of 4.5 percent set in 2000. The appropriate comparison is not, however, with 2000 but rather with the early 1990s when the United States last suffered a recession. It is a telling fact that in 1991, helped by some payments associated with the Gulf War, the United States actually recorded a surplus of more than $4 billion -- equal to about 0.1 percent of GDP.
What is all this telling us? Basically that America does not make much of anything any more. Even in the worst economic times in a decade, America must continue to import at near record levels. There is no alternative � because so much of the country�s once unbeatable manufacturing base has been hollowed out.
Attached is an official commentary that accompanied the announcement of the September figures.
------------------------------------------------------------------------
December 19, 2001
Goods and Services Deficit Increases in October 2001
The Nation's international deficit in goods and services increased to $29.4 billion in October, from $19.0 billion (revised) in September, as imports increased more than exports.
Goods and Services
* Exports increased to $77.3 billion from $76.8 billion in September. Goods were $56.6 billion in October, up from $55.6 billion in September, and services were $20.7 billion in October, down from $21.2 billion in September.
* Imports increased to $106.8 billion from $95.8 billion in September. Goods were $91.6 billion in October, up from $91.1 billion in September, and services were $15.2 billion in October, up from $4.7 billion in September.
* For goods, the deficit was $35.0 billion in October, down from $35.5 billion in September. For services, the surplus was $5.6 billion in October, down from $16.5 billion in September.
Goods by Category
* The September to October change in exports of goods reflected increases in industrial supplies and materials ($0.4 billion); consumer goods ($0.2 billion); foods, feeds, and beverages ($0.2 billion); other goods ($0.2 billion); and capital goods ($0.2 billion). A decrease occurred in automotive vehicles, parts, and engines ($0.1 billion).
* The September to October change in imports of goods reflected increases in capital goods ($0.5 billion); consumer goods ($0.2 billion); other goods ($0.2 billion); and automotive vehicles, parts, and engines ($0.1 billion). A decrease occurred in industrial supplies and materials ($0.6 billion). Foods, feeds, and beverages were virtually unchanged.
Goods by Geographic Area (Not Seasonally Adjusted)
* The goods deficit with China increased from $8.5 billion in September to $9.2 billion in October. Exports increased $0.2 billion (primarily oil seeds) to $1.6 billion, while imports increased $0.8 billion (primarily telecommunications equipment and computers and computer products) to $10.8 billion.
* The goods deficit with Japan increased from $5.4 billion in September to $7.0 billion in October. Exports were virtually unchanged at $4.3 billion, while imports increased $1.6 billion (primarily automobiles and automobile parts; toys, games, and sporting goods; telecommunications equipment; and organic chemicals) to $11.3 billion.
* The goods deficit with Western Europe increased from $3.8 billion in September to $7.6 billion in October. Exports increased $1.3 billion (primarily transport equipment, oil seeds, and pharmaceutical products ) to $14.1 billion, while imports increased $5.0 billion (primarily automobiles and automobile parts, organic chemicals, pharmaceutical products, and power generating machinery) to $21.7 billion.
|
|
Contact Eamonn Fingleton |
|
|
|
