The government’s first figures for fourth quarter and full-year 2016 gross domestic product (GDP) showed the biggest relative quarterly jump in the real annualized U.S. trade deficit (14.82 percent) since the second quarter of 2010 (14.90 percent). As a result, the cumulative trade drag on the current weak U.S. economic recovery shot up from 6.57 percent to 10.13 percent. Trade also took its biggest absolute bite from annualized quarterly real growth (1.70 percentage points from 1.86 percent annualized growth) since the second quarter of 2010 (1.77 percentage points from 3.86 percent annualized growth).
On an annual basis, though, trade drag’s on constant-dollar American growth fell from 0.71 percentage points out of a 2.60 percent improvement to 0.12 percent out of a 1.60 percent uptick. The fourth quarter price-adjusted annualized trade deficit of $599.9 billion was the biggest since the $623.7 billion mark of the first quarter of 2008, and the annual real trade shortfall of $561.6 billion was the biggest since 2007’s $712.6 billion. Both previous peaks were reached as the Great Recession was breaking out.
The new GDP figures revealed new real export records for services ($685.4 billion annualized) on a quarterly basis and for combined goods and services exports ($2.1284 trillion) on an annual basis. New records were also set for quarterly overall imports ($2.7380 trillion annualized), and quarterly goods imports ($2.2548 trillion annualized), and for annual overall imports ($2.6901 trillion), goods imports ($2.2101 trillion), and services imports ($477.6 billion).
Here are the trade highlights from Friday morning’s GDP report from the Department of Commerce:
>The U.S. government’s advance reading of fourth quarter and full-year 2016 inflation-adjusted gross domestic product (GDP) growth shows that a major jump in the quarterly real trade deficit greatly boosted trade’s drag on the nation’s already feeble economic recovery.
>The inflation-adjusted trade deficit for goods and services surge by 14.82 percent on quarter, from $522.2 billion at an annual rate to $599.6 billion. This largest sequential percentage increase since the second quarter of 2010 (14.90 percent) resulted in the greatest trade bite from quarterly growth (1.70 percentage points out of a 1.86 percent annualized real GDP increase) since that second quarter of 2010 (1.77 percentage points out of 3.86 percent annualized growth).
>In consequence, the trade subtraction from cumulative real GDP growth during this historically feeble American economic recovery increased from 6.57 percent to 10.13 percent.
>The rise in the Made in Washington U.S. trade deficit has slashed recovery-era growth to a much greater extent. This gauge measures trade flows heavily influenced by U.S. trade policies – of goods excluding oil (which doesn’t tend to come up in trade negotiations and where American net imports have dropped dramatically) and services (where trade liberalization remains limited).
>Although the first full-year 2016 figures won’t be released until next week, as of the third quarter, the increase in this Made in Washington shortfall cut cumulative inflation-adjusted growth during the recovery by 16.05 percent.
>On an annual basis, trade reduced growth by less in 2016 (0.12 points out of a 1.60 percent real GDP increase) than in 2015 (when it cut 0.71 percentage points from 2.60 percent growth).
>The real trade deficit also grew in 2016 at a much slower pace (four percent) than in the fourth quarter. Nonetheless, at $561.6 billion, it was the greatest annual price-adjusted trade gap since 2007 ($712.6 billion).
>The real trade deficit is also up proportionately as of the end of 2016. In the fourth quarter, it reached its highest share of after-inflation GDP (3.57 percent) since the fourth quarter of 2008 (3.64 percent).
>The full-year 2016 constant-dollar trade gap as a share of real GDP reached its highest level (3.37 percent) since 2008 (3.76 percent).
>In addition, the real trade deficit’s absolute sequential increase in the fourth quarter of 2016 ($77.4 billion) was the strongest such rise since these figures began being tabulated by the Commerce Department in 1999.
>The new GDP figures showed that on a sequential basis, services exports rose by 0.22 percent in the fourth quarter – to a new record of $685.4 billion on an annualized basis.
>Moreover, on an annual basis, combined goods and services exports hit an all-time high, too – rising 0.37 percent in 2016, to $2.1284 trillion.
>Yet import records were hit in the combined real goods and services, and real goods categories on a quarterly basis, and in all major inflation-adjusted categories on an annual basis.
>In the fourth quarter, overall imports rose by two percent after inflation, to $2.7380 trillion annualized.
>Price-adjusted goods imports were up 2.62 percent, to $2.2548 trillion annualized, during the quarter.
>During full-year 2016, overall real imports increased by 1.11 percent, to $2.6901 trillion.
>Real goods imports during the year were 0.73 percent higher than in 2015, reaching $2.2101 trillion.
>Real services imports in 2016 rose by 2.84 percent, to $477.6 billion.