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The U.S. government’s final (for now) third quarter 2016 gross domestic product (GDP) showed a continuation of trends reported in the previous revision with one notable exception: Significantly negative revisions for service trade numbers.  Sequential service export levels were reduced by 0.22 percent, and imports upgraded by 0.23 percent. As a result, the latter are now up quarter-to-quarter by 2.37 percent – fastest rate since the second quarter of 2011 (2.10 percent).

The total trade deficit figure was revised slightly upward (from to $522.2 billion from $521 billion – still the lowest since the second quarter of last year) and therefore trade’s contribution to overall quarterly growth dipped from 0.87 percentage points of a 3.12 percent annualized real expansion to grow to 0.85 percentage points of 3.47 percent growth at an annual rate. Nonetheless, trade’s relative growth contribution remained the highest since the fourth quarter of 2012 (0.58 percentage points of that quarter’s 0.09 percent annualized growth). In addition, the sequential drop in the combined goods and services trade deficit is still the biggest (6.50 percent) since the fourth quarter of 2013 (11.53 percent).

Total real exports and goods and services exports remained at record levels. Their growth rates, moreover, were still the highest since the fourth quarter of 2013. The trade drag on growth during the current economic recovery rose from 6.56 percent to 6.57 percent – still a multi-year low.

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

>The U.S. government’s final (for now) reading for inflation-adjusted gross domestic product (GDP) in the third quarter of 2016 showed that trade still made its biggest relative contribution to economic growth since the end of 2012, but that this recovery-spurring role continued shrinking slightly from the results of the initial GDP report. Sizable negative revisions in services trade were largely responsible.

>Whereas trade’s growth contribution last month was pegged at 0.87 percentage points out of 3.12 percent annualized growth, today’s figures reduced these numbers to 0.85 percentage points out of 3.47 percent growth. The initial third quarter reading pegged the trade contribution at 1.17 percentage points of a 2.87 percent annualized expansion.

>The latest growth contribution figure still stands as the greatest since the fourth quarter of 2012, when trade accounted for 0.58 percent of its negligible 0.09 percent price-adjusted improvement.

>The smaller trade role stemmed not only from faster growth but from a slightly higher quarterly real trade deficit estimate – $522.2 billion annualized rather than the $521 billion previously reported. This figure is the lowest since the $524.9 billion shortfall in the second quarter of last year. Moreover, the 6.50 percent quarterly drop in the trade gap was the biggest since the 11.53 percent decrease in the fourth quarter of 2013.

>In turn, the small deterioration in the after-inflation trade deficit resulted largely from worse services trade figures.

>Constant dollar services exports in the third quarter were downgraded by 0.22 percent (from $685.4 billion annualized to $683.9 billion). The previously reported total had been a record.

>Constant dollar services imports in the third quarter were revised upward by 0.23 percent (from $483.1 billion annualized to $484.4 billion). The former total was a new record, which has now been broken.

>In addition, the new data show that real services imports rose sequentially in the third quarter by 2.37 percent – the strongest rate since the 2.10 percent of the second quarter of 2011.

>Total after-inflation exports advanced by 2.40 percent sequentially, according to the new GDP data, to $2.1620 trillion at an annual rate. That’s down fractionally from the $2.1629 trillion and 2.44 percent figures reported last month. But the quarterly growth rate was still the highest since the 2.84 percent rise in the fourth quarter of 2013.

>Inflation-adjusted goods exports in the third quarter are now judged to have hit $1.4792 trillion at an annual rate – a rise of 3.43 percent. That result improved a bit from the $1.4783 trillion and 3.37 percent figures reported last month, and the increase is still the largest since the 3.72 percent achieved in the fourth quarter of 2013. In addition, the real goods export total is another record high.

>Another modest increase was reported in the new real combined import numbers. They reached $2.6843 trillion at an annual rate in the third quarter, up 0.55 percent sequentially. That compares with their previously reported $2.6839 trillion level, which had been up 0.53 percent. The new level is another new record.

>Real goods imports are now pegged as having risen by 0.13 percent (to $2.1972 trillion annualized) rather than increasing by 0.17 percent (to $2.1981 trillion) reported last month.

>Real goods imports are now down 0.19 percent from their all-time high – $2.2014 trillion annualized – hit during the fourth quarter of 2015.

>The small rise in the overall real third quarter trade deficit nudged the shortfall’s growth drag on the current economic recovery to 6.57 percent from the 6.56 percent previously calculable. As of the second quarter, the growth killed by trade reached 8.63 percent of cumulative recovery-era growth.

>Yet according to separate figures kept by the Census Bureau, the growth toll of the trade deficit heavily influenced by trade agreements and other trade policy decisions, is much greater. This Made in Washington deficit – comprised of America’s non-oil goods trade – had cut cumulative recovery-era growth by 15.85 percent, or $375.94 billion in real terms, as of the third quarter.

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