Yesterday’s first official take on America’s fourth quarter, 2015 gross domestic product (GDP) showed that the trade deficit’s continued resurgence was the biggest drag on the period’s feeble 0.69 percent annualized real growth. In addition, since these figures have generated the first take on full-year 2015 performance, they revealed that trade took the biggest slice from its 2.38 percent constant-dollar growth – and undermined economic expansion by the greatest relative percentage since 2002. As a result, America’s trade performance has now slowed the nation’s growth during this historically slow recovery by nearly ten percent after inflation.
Moreover, total real exports fell year-on-year for the first time since the end of the last recession, in 2009, while inflation-adjusted goods and services imports continued growing and hit their latest annual record. The real trade deficit in 2015, consequently, rose to its highest annual level since 2008, and its annual deterioration was the worst such widening since 2000. As for the inflation-adjusted quarterly trade deficit, its October-to-December, 2015 total was the biggest since the first quarter of 2008.
Here are the trade highlights from this morning’s GDP report:
>Today’s GDP figures, which present the first read on the fourth quarter of 2015, show a mounting trade toll on the historically slow U.S. recovery even as the pace of overall growth slowed even further.
>According to the new GDP release, the fourth quarter inflation-adjusted goods and services trade deficit grew from $546.1 billion on an annualized basis to $566.5 billion – the worst such figure since the $550.4 billion registered in the second quarter of 2008.
>This trade gap increase cut the fourth quarter’s annualized real growth of 0.69 percent by 0.47 percentage points – an amount greater than that exacted by any other component of the gross domestic product.
>The new figures also revealed that trade was the biggest negative for growth for all of 2015. The deficit increased from $442.5 billion in 2014 to $547.1 billion – the highest annual total since 2008 and the worst annual deterioration in percentage terms (23.64 percent) since 2000. This change sliced 0.66 percentage points off the year’s inflation-adjusted 2.38 percent growth rate.
>That represents the biggest annual trade bite out of economic growth in absolute terms since 2004. It’s also the biggest trade hit to growth in relative terms since a rising deficit subtracted 0.64 percentage points from 2002’s 1.80 percent after-inflation expansion. The trade deficit’s growth was the biggest factor hindering 2015’s overall expansion as well.
>In the fourth quarter of 2015, worsening net trade reduced that period’s annualized 1.97 percent growth by 0.26 percentage points, and for all of 2014, the cost was 0.18 percentage points out of 2.43 percent real growth.
>As a result of the major fourth quarter deterioration, trade’s drag on the current economic recovery has grown as well. Had the trade deficit shortfall simply held steady since this expansion began, in the second quarter of 2009, the economy’s cumulative expansion would have been 9.59 percent greater – $200.2 billion in constant dollars.
>Separate figures (from the Census Bureau) show that the recovery drag of that portion of the trade deficit strongly influenced by trade deals and related policies – the real non-oil goods deficit – has been much greater. Since the second quarter of 2009 through the third quarter of 2015, its increase has cut cumulative recovery-era growth by fully 24.43 percent. Had it simply held steady, cumulative recovery real growth would have been nearly $502.86 billion greater through the end of the third quarter.
>Next week’s release of December trade data will enable calculating trade’s effect on growth through the end of 2015.
> The new fourth quarter data showed that total U.S. inflation-adjusted exports fell sequentially from the third quarter’s $2.1211 trillion to $2.1078 trillion. The 0.63 percent decrease was the first quarter-to-quarter export drop since the winter-affected first quarter of the year.
>Yet the greater amount of after-inflation combined goods and services imports reached record territory again in the fourth quarter. Despite significantly slowing growth, their $2.6743 trillion level topped the third quarter total of $2.6672 trillion by 0.27 percent.
>Annualized real goods exports declined by 1.39 percent between the third and fourth quarters – from $1.4488 trillion to $1.4287 trillion. Coming on top of the third quarter sequential drop, real goods exports are now down consecutively for the first time since the end of the last recession, in the second quarter of 2009.
>By contrast, constant dollar goods imports inched up by 0.16 percent sequentially in the fourth quarter – from $2.1860 trillion to $2.1895 trillion. The total represented another new all-time quarterly high.
>The much smaller services export and import totals also set new records in the fourth quarter.