, , , , , , , ,

The final (for now) GDP revisions for the fourth quarter of last year and the whole year reduced the trade drag on real sequential growth yet again, but it still remained the biggest obstacle to adequate yearly growth and to a satisfactory recovery.  The trade deficit’s increase has now slowed the weak current expansion by nearly nine percent, and the trade bite from annual growth remains at a multi-year high.  

The real annual and quarterly trade shortfalls were revised down but were still the worst since 2008, and the trade deficit’s year-on-year growth is still the greatest percentage-wise since 2000.  Quarterly and annual real export totals were revised slightly up and imports revised slightly down, and full-year 2015 combined imports and exports remained at all-time highs.  At the same time, exports rose at their slowest annual pace since the recession began, but imports rose at their fastest annual rate since 2011.

Here are the trade highlights from Friday morning’s GDP report:

>Yesterday’s gross domestic product (GDP) figures, which present the final – for the time being – read on the fourth quarter of 2015 and on full-year 2015, showed that the U.S. real trade deficit’s subtraction from sluggish growth during both periods shrank still further from the original estimate presented two months ago. Yet it still remained the biggest obstacle to an adequate recovery in 2015. The new data similarly revised the actual quarterly and annual trade shortfalls down slightly, but still pegged both at multi-year highs.

>The new release pegged pegged the annualized fourth quarter inflation-adjusted trade deficit at $551.9 billion – lower than the previously reported $556.8 billion but still the highest quarterly figure since the $623.7 billion recorded for the first quarter of 2008, as the Great Recession was taking hold.

>This real trade gap, 1.06 percent higher than the third quarter figure of $546.1 billion, subtracted 0.14 percentage points from the upwardly revised overall annualized growth figure of 1.38 percent for the quarter. The previous fourth quarter figures showed that trade subtracted 0.25 percentage points from one percent annualized growth.

>In fact, the new GDP statistics show that the trade hit was only the second biggest subtraction to growth from the still-subpar quarter (behind gross private investment), not the biggest, as previously reported.

>The new GDP figures also reported a smaller full-year 2015 trade deficit than last month’s release – $543.4 billion versus $544.7 billion. Nonetheless, this trade gap was still the biggest such figure since the $557.8 billion shortfall of 2008, early in the last recession, and the annual deterioration it represents is still the worst (22.80 percent) since 2000 (26.70 percent).

>This annual trade deficit cut 0.64 percentage points from last year’s 2.43 percent real growth increase – the same sized absolute hit as previously reported from the slightly weaker 2.40 percent growth estimate. But the deficit’s growth also was the biggest negative in that year’s economic performance and still the worst such hit to yearly growth in absolute and relative terms since 2004 and 2002, respectively.

>As a result of these new figures, trade’s drag on the entire economic recovery is slightly smaller than the previous GDP release revealed, but still substantial. Has the after-inflation trade shortfall simply held steady since the current expansion began, in the second quarter of 2009, the economy’s cumulative expansion would have been 8.78 percent greater rather than 9.07 percent greater. The growth hit in absolute terms consequently shrunk from $190.50 billion to $185.6 billion.

>In the third 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.

>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 fourth quarter of 2015, its increase has cut cumulative recovery-era growth by fully 19.91 percent, or just under $420 billion.

>These figures are down from the 24.43 percent ($502.86 billion) numbers reported through the end of the third quarter.

>The new data slightly increased fourth quarter U.S. inflation-adjusted export levels – from $2.1066 trillion annualized to $2.1103 trillion. But since the third quarter total was $2.1211 trillion, the figure still represented the first sequential export drop since the winter-affected first quarter of 2015.

>These figures also pushed down further the fourth quarter import totals – from a downwardly adjusted $2.6634 trillion annualized to $2.6622 trillion. That still represents the first quarterly import drop since the third quarter of 2011.

>In addition, the GDP revisions revealed a fourth quarter goods export figure that was a bit stronger ($1.4289 trillion annualized) than the downwardly revised second estimate ($1.4273 trillion). Yet the new number still means that quarterly real goods exports have now dropped consecutively for the first time since the end of the last recession, in the second quarter of 2009.

>According to the new GDP figures, fourth quarter goods import totals were fractionally lower than previously estimated – $2.1787 trillion annualized as opposed to $2.1794 trillion. That still represents the first sequential goods import decline since the third quarter of 2011.

>On a yearly basis, Friday’s GDP data pegged total 2015 exports at $2.1101 trillion – slightly higher than the previous estimate of $2.1091 trillion. That represents a 1.14 percent increase over the 2014 total – the worst such annual performance since recessionary 2009, when they fell.

>Full-year 2015 goods and services imports were also revised down slightly again, from $2.6538 trillion to $2.6535 trillion. This total amounted to a 4.93 percent rise from 2014’s $2.5289 trillion – and still came to another new record.

>In goods trade, full-year 2015 exports were revised back up from $1.4394 trillion to $1.4397 trillion. This 0.23 percent dip from 2014’s $1.4430 trillion level remained the first annual drop since the recession year 2009.

>2015 goods import totals were downgraded fractionally as well, – from $2.1762 trillion to $2.1761 trillion. As a result, they are now judged to be up 4.80 percent from the 2014 total of $2.0765 trillion, and still represent a new record high, too.