Key Trade Data Shows Rapidly-Worsening Deficit


With ECRI’s focus on economic cycles, including a large array of specialized leading indexes, we have a solid read on where we are in the business cycle. But our cyclical vantage point also allows us to distinguish between those economic developments that are cyclical, and those that are structural in nature. While we are strictly nonpartisan, political change is often spurred by economic forces, particularly longer-terms shifts, including those in foreign trade, which figured prominently in the 2016 presidential election.

Donald Trump rode to the White House in part on the promise of an economic revival at home, largely by reversing the massive deficits piling up between the U.S. and nearly all its trading partners, China chief among them.

A year later, there is an indication that this imbalance has increased against the U.S. and in favor of its trading partners.

Trends in the three key sectors of U.S. trade are revealing. The chart shows the U.S. trade surplus in services, along with the trade deficits in both petroleum and non-petroleum goods.

Since 2010 the U.S. trade surplus in services has more than doubled – an $11.6 billion increase – leveling off over the last few years.

Meanwhile, the petroleum goods trade deficit has shrunk by over $21 billion this decade, to its lowest level this century, and “thanks to the fracking revolution, the U.S. has now become the third-largest producer of crude oil” in the world.

This has helped the U.S. to supply about 3.5% of China’s oil imports, but this improvement in petroleum exports has “been swamped by a staggering expansion in [the] non-petroleum trade deficit to a record high” (ICO Essentials, December 2017). The non-petroleum trade deficit has more than doubled since 2010, almost a $39 billion run-up that accelerated in the past year.

With the U.S. ramping up the production of oil – an industry synonymous with cyclical booms and busts –this sector’s volatility, combined with “very low trend growth increases the odds that every cyclical slowdown will open up a recessionary window of vulnerability.”

A key part of President Trump’s economic platform involves lowering the U.S. trade deficit. The U.S. approaching energy independence certainly helps on that score, though also making the U.S. more dependent on the energy requirements of its global trading partners – including China.

At the same time, while the services trade surplus has leveled off, the U.S. non-petroleum goods trade deficit continues to hit new records. Indeed, with both China and Mexico, the U.S. non-petroleum goods trade deficit has never been higher over any 12-month period in history. Against that backdrop, it comes as no surprise that Mexican auto exports to the U.S. hit a record high in 2017.

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MK ULTRA Alpha IH8OBAMA Fri, 01/12/2018 - 14:13 Permalink

You're correct, the trade deficits would have been worse with Murdering Bitch Clinton.

This article was an unbiased objective assessment of the US economy. Hydrocarbon production at one point was touted as the only economic rebound driver. Lower hydrocarbon cost for the last three years has been the main reason US GDP growth was above 3%.

The cost of hydrocarbons was cut in half, this was like a tax cut, this input was a major factor for the economic rebound. It takes 18 months before the results of an economic input materializes. The reduced cost of hydrocarbons took around 18 months to impact GDP growth.

Another point, the increased imports deficit included the greatest increase in the purchase of robotic manufacturing capital equipment.

Both trends, the hydrocarbon production expansion and the robotic retool of US manufacturing base will continue. The increased demand for military production from domestic and foreign buyers will add significantly over the next 18 months.

In reply to by IH8OBAMA

JIMSJOE2 MoreFreedom Fri, 01/12/2018 - 10:46 Permalink

The trade deficit is meaningless as long a the US Capital Account is more than the deficits. In other wards as long as the US has more capital moving in than going out this is meaningless. This capital has been flowing in since 2011 and will continue as Europe collapses in 2018, US multinationals will bring in trillions from overseas which will fuel additional highs in US equities with increasing dividend yields and share buybacks and this of course will fuel additional investment both domestic and internationally. In addition as US oil firms will start to export crude in larger quantities this will decrease the deficits as a large percentage of this is actually oil imports. This is why the petrodollar has become also meaningless in the Middle East and why Congress threw the Saudis under the bus.

In reply to by MoreFreedom

Consuelo JIMSJOE2 Fri, 01/12/2018 - 13:43 Permalink



'...and will continue as Europe collapses in 2018' (and 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017 and now 2018.   Correct...?


'...will continue'


'...will bring in trillions...'


'...which will fuel additional highs in US equities'


'...will fuel additional investment'


'...will start to export crude'


'...this will decrease the deficits'


Well, guess that settles it.   Hey Tylers - may as well shut 'r down - this job is mopped.

In reply to by JIMSJOE2

wmbz Fri, 01/12/2018 - 10:23 Permalink

"While we are strictly nonpartisan"

This statement always reminds me of someone who starts off by saying.

"I'm going to be honest with you" Inferring that at other times they are not. 

buzzsaw99 Fri, 01/12/2018 - 10:26 Permalink

it isn't just china and energy.  europe would have a heinous trade deficit with china and energy too if it weren't for the good ole usa bending over for them.  the eu and china both deserve to be donald duck-fucked.

Everybodys All… Fri, 01/12/2018 - 10:47 Permalink

These trade numbers are nearly meaningless when you consider the Trump tax changes have just been put into effect. Give it some time. If we don't see improvement by mid year then I'd raise the white flag.

Wild E Coyote Fri, 01/12/2018 - 11:26 Permalink

Under Trump, the decline in petroleum goods exports has been reversed. 

And under him, there has been slight increase in export of services.

But bloody Americans are still importing tons of shit goods from the same companies which used to manufacture them in America and now manufacturing in China, Mexico and Canada (NAFTA). 

Let Trump do his job. He will reverse that too.  


MrBoompi Fri, 01/12/2018 - 11:29 Permalink

It took 50 years to get to this point and it would take another 50 years to dig ourselves out of it.  If we start now that is, and there's no indication we are willing to address the problem.  Offshored jobs will not magically re-appear overnight no matter what a president says.  Americans have lost a lot of ground while the Chinese have gained.  China was a very poor country a few decades ago.  If nothing is done, Americans will be forced to make Chinese-level wages.  So either the Chinese wage goes up or our wages go down before jobs come back.  And the Chinese wage is certainly going up, putting more pressure on trade deficits.    

JibjeResearch Fri, 01/12/2018 - 11:41 Permalink

The reason we are losing in Non-petroleum goods is because we don't have many manufacture things any more.

Our elites want to be a servicing economy.  If we are to decrease the trade imbalance in this area, we need to be producing stuffs again.

hooligan2009 Fri, 01/12/2018 - 11:48 Permalink

the largest contributors to the trade deficit are imports of phone components, car components and low ticket merchandise.

the US has to learn how to compete in manufacturing products.

china has this website (plus the ubiquitous ali baba/baidu ones)

to MAGA, the US needs a revolution in automation to produce all the products being imported - the old fashioned "import substitution".

now if only americans would spend as much time developing robotics that produce imported goods.

be a good idea for universities to begin training students in the art of this, instead of creating safe spaces and inciting racial divisions like supporting blm/antifa.

libtard socialists should stop sponsoring welfarism and start sponsoring advanced education with a clear migration from non-attendance plus welfare and the "everybody wins/nobody loses" mentality.

3d printing would replace almost all these products and by-pass the slave labor/sweatshop conditions that these low value imports sponsor in the shithole socialist/communist countries they originate from.

in this way, the US would lead advances in working conditions in shithole emerging markets/third world economies by removing the demand for low ticket products.


Money_for_Nothing Fri, 01/12/2018 - 12:45 Permalink

Read: The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy by Michael Pettis. Michael Pettis in this book clears up the mystery about trade deficits.

A "Service Economy" mostly means a large number of whores and con-men. Balanced Trade would occur naturally if allowed. The US is a rich country (people and resources). If you don't believe me do an internet search on Russian Federation President Putin statements. George HW Bush and the other US presidents till Trump sold out the US for personal gain. I was banned on a CIA web site (Ace-of-Spades) for pointing that out. MAGA is anathema to all the Democrat US Presidents since at least 1912 (Wilson). The only Republican US Presidents since 1950 who believed in the greatness of the US: Eisenhower, Reagan, and Trump.

chinooky47 Fri, 01/12/2018 - 13:04 Permalink

The energy sector brings jobs.  The US should become 100% energy independent and large exporter of finished energy goods of all types, not just petroleum. Refine the oil in the US and export it.  Export our energy products that are non-petroleum based also, i.e. ethanol, bio-fuels, solar systems, coal, etc.  This keeps jobs here and decrease our balance of trade. Set a nation-wide goal of being the lowest cost producer of finished products via manufacturing excellence and robotics.  Japan has done well, we can do better.

Parrotile chinooky47 Fri, 01/12/2018 - 17:38 Permalink

How much PROFIT has the shale oil industry produced?? Lots of "investment" but not a single red cent of profit. (And that's before the "much later realisation" of the costs of environmental damage - costs that are conveniently dumped on "someone else" -…)…

The only area where the US is a World Leader is in arms sales, and even that dubious "first" is under significant threat from Russia - who produce cheaper (to buy and operate), and demonstrably more effective "product".

"Service" jobs are great - until others decide to produce their OWN service economy - and with the inevitable changes all starting in five day's time, even "exporting dollars" may be coming to an end.…

In reply to by chinooky47