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Because the economy, its strengths and weaknesses, and the policy issues they raise haven’t disappeared despite, yesterday’s outrageous attack on the U.S. Capitol Building, I’m reporting as usual in detail on this morning’s monthly international trade figures (for November).

But a first read of the data, anyway, reveals something pretty unusual (aside from the now-standard CCP Virus- and lockdowns-related distortions) – the 7.97 sequential increase in the combined goods and services deficit, to the second biggest monthly level ever, came from a very large number of sources. And some of the biggest standard culprits (including recent problem sectors like services) played a very minor role.  

At the same time, it’s important to remember that the makeup of that all-time worst overall monthly trade gap ($68.28 billion, in August, 2006), was completely different from the latest $68.14 billion total in that 38.31 percent consisted of oil. The latest trade data show a small oil surplus. That change has major policy implications, since (as known by RealityChek regulars), it means that now the entire trade shortfall in goods (the bulk of the overall deficit) comes in those flows heavily influenced by trade policy. And we’ll get back to that “Made in Washington” portion of the trade gap below.

The November figure brought the year-to-date total trade deficit figure to $604.82 billion – 4.85 percent bigger than last year’s counterpart of $576.85 billion. As a result, the December results are certain to produce a new annual record (currently held by 2018’s $579.94 billion).

Nevertheless, this projected figure as a share of the total U.S. economy (measured as pre-inflation gross domestic product or GDP) would be well below 2006’s record of 5.58 percent, and could trail some levels hit in the 2010s.

Meanwhile, the goods, or merchandise, trade deficit hit its own all-time high in absolute terms (not the relative terms described immediately above), with the $86.36 billion level topping August’s $83.90 billion. And the November surplus of $18.21 billion represented the worst monthly services trade performance since August, 2012’s $17.08 billion.

The rise in the November overall trade deficit stemmed entirely – and then some – from the 2.94 percent increase in total imports from $245.11 billion to $252.32 billion. And worsening goods imports were just about the whole story, growing 3.04 percent sequentially from $207.76 billion to $214.08 billion. Total exports improved by 1.19 percent, from $182.00 billion to $184.17 billion.

As suggested above, the “Made in Washington” trade deficit (which strips out not only oil, but services, since the former is almost never the focus of trade policy, and liberalization in the latter remains embryonic globally) hit a new monthly record, too. The $85.70 billion November figure was 5.54 percent higher than October’s $81.20 billion total, and slightly exceeded August’s previous $84.65 billion all-time high.

Standing at $830.21 billion to date this year, this trade gap, too, will certainly top the annual record of $840 billion set in 2019.

Strangely, though, two of the biggest historical pieces of the trade deficit – the China goods and manufacturing gaps – were little changed on-month in November.

The former increased by 1.90 percent month-to-month, to $30.68 billion, as U.S. exports fell slightly and the much greater amount of imports increased fractionally. Moreover, year-to-date, this deficit is down 11.51 percent year-to-date, making clear that the Trump tariffs have diverted trade to countries that much friendlier politically, and much less predatory economically.

More evidence for this proposition – and for the overall economic success of the Trump levies: As recent news accounts of China’s official trade figures continually emphasize, the People’s Republic’s global goods exports have been booming lately. This Agence France-Presse article reported that China’s November goods exports represented a 21.1 percent jump on a year-to-date basis, and its merchandise trade surplus surged 29.06 percent on-month.

But if the U.S. November data are to be believed, almost none of this Chinese growth – and, most significant, its trade-fueled economic growth – has been achieved at America’s expense.

The even more chronic and much bigger manufacturing trade deficit actually declined slightly on month in November – by 1.74 percent from October’s record $110.20 billion. But at $108.28 billion, this monthly trade shortfall was still the second biggest of all time.

Year-to-date, the manufacturing trade gap stood at $1.00626 trillion – 5.83 percent bigger than last year’s $950.86 billion. As a result, the 2020 annual figure will certainly break last year’s record $1.03314 billion. But it will be important is by how much, since this trade deficit’s annual growth has slowed markedly since 2013 – from 11.78 percent in 2014 to 1.31 percent in 2019. In fact, as previously reported here, if not for Boeing’s safety woes crippling the trade performance of the big surplus-generating aerospace sector, the 2019 manufacturing trade deficit would have barely worsened at all.