The U.S. trade deficit in December offered some sour news for the American economy as it grew by $4.4 billion (12%) to $38.7 billion. Analysts had expected a deficit of about $36 billion.
Looking back over 2013, the trade deficit in goods and service did shrink, to $471.5 billion from $534.7 billion in 2012. Both goods and services contributed to the improvement. The U.S. services surplus in trade grew 12% to $24.8 billion and the deficit in goods shrank to $38.2 billion, a 5.1% improvement.
The energy revolution in the U.S. was apparent in the year-long totals as the trade deficit in petroleum goods fell by $59 billion, a decline of just over 20%.
But for the rest of the goods industries, the trade deficit continued to rise, from $438 billion in 2012 to $456 billion in 2013. The Economic Policy Institute warned:
“Growing trade deficits in non-petroleum goods have been a primary driver in the displacement of U.S. manufacturing jobs over the past decade. Trade deficits in non-petroleum goods, which have increased over the past four years, remain a substantial threat to the recovery of U.S. manufacturing employment.” [EPI]
U.S. manufacturing exports barely registered growth in 2013, up just 1.6% from the previous year. Calling this growth “disappointingly slow,” NAM Chief Economist Chad Moutray observed:
“[I]t indicates that growth in manufactured goods exports remains soft, decelerating from the 5.7% growth rate observed through all of last year. It is well below the 15% rate that would be needed to double exports by 2015, as outlined in the President’s National Export Initiative.” [Shopfloor]
In December, all goods export categories except food and beverage fell. That had Michael Dolega, a senior economist with TD Economics, calling the breadth of the declines a “concern.”
“…the rebound in Europe and Japan may not be able to offset the expected slowdown in emerging markets. This theme is further underscored by the surging greenback as the Fed stays the tapering course.”
Not unexpectedly, China led the deficit parade in December, with a total of $24.5 billion. And for all of 2013, the U.S. trade deficit in goods with China grew to a record $318.42 billion. Economist Alan Tonelson of the U.S. Business and Industry Council said the growing deficit with China belies talk of a U.S. manufacturing renaissance.
“Continuing annual record merchandise trade deficits with China clash with a widespread belief that America is improving its industrial competitiveness largely at the expense of a rival that is increasingly pricing itself out of its traditional export markets.”