This morning’s U.S. trade figures revealed numerous records and multi-year highs set for the month of December and full-year 2017, but few represented good news. The monthly overall U.S. trade deficit hit its highest level ($53.12 billion) since October, 2008 ($70.14 billion) – just as the Lehman Brothers bankruptcy plunged financial markets and the entire economy into a tailspin. On an annual basis, the combined goods and services trade shortfall was the highest ($566.03 billion) since 2008’s $708.73 billion. And its yearly increase (12.13 percent) was the greatest since 2010’s 28.89 percent. New annual records were also set for total monthly imports ($256.47 billion) and annual imports ($2.895 trillion), as well as for monthly exports ($203.35 billion). But annual exports ($2.329 trillion) fell short of 2014’s record $2.376 trillion.
America’s manufacturing trade deficit fell for the second straight month in December, to $78.24 billion. But that performance was enough to send the annual total into record territory ($927.48 billion). The U.S. goods deficit with China in December took its biggest monthly tumble (13.05 percent) since February’s 26.64 percent. The December total ($30.81 billion) also was the lowest since May’s $31.61 billion, and resulted largely from an all-time high for U.S. goods exports ($13.67 billion). Nonetheless, the $375.22 billion annual merchandise shortfall with China set a new record as both goods exports to and imports from China hit new records of $505.60 billion and $130.37 billion, respectively.
In addition, as President Trump continued to try renegotiating the North American Free Trade Agreement (NAFTA), the American goods deficit with Mexico increased in 2017 to $71.06 billion – its highest level since 2007’s $74.80 billion.
Another all-time high was set by the U.S. deficit in high tech goods. At $110.38 billion, it featured both record exports ($353.87 billion) but also record imports ($464.26 billion). Monthly high tech exports also entered record monthly territory in December ($33.53 billion).
The new trade figures also showed that monthly trade deficit surge helped boost the growth drag of the “Made in Washington” trade deficit to 18.47 percent during the current economic recovery. This is the shortfall in trade flows heavily influenced by U.S. trade policy, and its increase since the last recession ended has sliced $538.89 billion after inflation from the cumulative expansion of real gross domestic product.
Here are selected highlights of the latest monthly (December) and full-year 2017 trade balance figures released this morning by the Census Bureau:
>The combined U.S. goods and services trade deficit rose on month in December by 5.32 percent to hit $53.12 billion – its highest level since October, 2008 ($70.14 billion), when the bankruptcy of Wall Street investment giant Lehman Brothers sparked a dizzying tailspin in financial markets and the real economy.
>December’s shortfall helped push the annual U.S. trade deficit for 2017 to its highest yearly total ($566.03 billion) since 2008 ($708.73 billion). Moreover, the overall trade deficit’s annual increase of 12.13 percent represented its fastest growth since 2010 (28.89 percent).
>The new trade figures showed that monthly imports in December reached an all-time high of $256.47 billion – their second monthly record in a row and a 2.49 percent increase from November’s $250.24 billion.
>Last year’s total imports set a new annual record as well. At $2.895 trillion, they were 6.73 percent higher than 2016’s total and 1.02 percent greater than the previous record of $2.866 trillion set in 2014.
>December monthly overall exports were a new record, too – rising 1.77 percent sequentially to $203.35 billion.
>But 2017’s annual combined goods and services exports of $2.329 trillion, though 5.49 percent higher than the 2016 figure, were lower than the annual record of $2.376 trillion, set in 2014.
>The huge, chronic American trade deficit in manufacturing fell sequentially in December for the second straight month, with its $78.24 billion level representing a 9.23 percent improvement.
>Manufacturing exports advanced on month by 2.16 percent, from $92.88 billion to $94.89 billion, while imports sank by 3.32 percent, from $179.08 billion to $173.13 billion.
>On an annual basis, however, the manufacturing deficit set its latest record high by climbing 7.46 percent percent to $927.48 billion.
>Between 2016 and 2016, manufacturing exports advanced by 4.34 percent, but imports swelled by 5.75 percent.
>The behavior of the manufacturing-heavy American merchandise trade deficit with China mirrored that of the overall manufacturing shortfall.
>December’s $30.81 billion U.S. goods trade deficit with China was 13.05 percent lower than November’s total, a sequential decrease that was the fastest since February’s 26.64 percent. The December figure was also the lowest since May’s $31.61 billion.
>Moreover, December’s U.S. goods exports of $13.67 billion were a record – eclipsing the previous peak of $13.15 billion, set in October, 2013, by 4.20 percent.
>Nonetheless, the full-year 2017 U.S. merchandise trade shortfall with China widened by 8.13 percent on year to a new record of $375.23 billion. That figure topped the old (2015) all-time high of $367.26 billion by 2.17 percent.
>U.S. goods exports to the strongly growing Chinese economy grew by 12.75 percent in 2017 to $130.37 billion – another record, and 5.43 percent better than 2014’s former all-time best of $123.66 billion.
>U.S. goods imports from China, however, hit a new record, too. At $505.60 billion, they were up 9.29 percent on year, and topped the previous (2015) record by 4.64 percent.
>The new trade figures could reenforce President Trump’s determination to renegotiate the North American Free Trade Agreement (NAFTA).
>As with China, the U.S. merchandise trade deficit with Mexico fell on month in December to $5.37 billion. That level was the lowest since July’s $4.92 billion, and a sequential drop of 10.14 percent from November’s levels.
>But year-on-year, this goods shortfall increased by 10.41 percent, to $71.06 billion – the highest level since 2007’s $74.80 billion.
>The goods trade deficit with Canada more than doubled on month, to $2.20 billion, and the annual total rebounded by 60.46 percent, to $17.58 billion after plunging by 28.73 percent on year in 2016, to $10.96 billion.
>The 2016 Canada goods deficit is the highest since 2014, but it’s less than half the level of that year’s $36.47 billion.
>America’s trade in high tech goods roughly duplicated this pattern, too. The monthly deficit plummeted by 36.65 percent from the record $15.63 billion in November to $10.06 billion. That monthly drop was the biggest since February’s 46.39 percent nosedive.
>This improvement stemmed from a 10.84 percent increase in exports to $33.53 billion – a new monthly record – and a five percent drop in imports from November’s record $45.88 billion to $43.59 billion.
>On an annual basis, though, the high tech goods deficit surged to a new all-time high of $110.38 billion in 2017 – up 31.93 percent on year and 11.82 percent higher than the previous record of $98.72 billion, set in 2011. The 2017 annual jump in the deficit was also the biggest since 2010’s 44.07 percent, when the current U.S. recovery was in its early stages.
>U.S. advanced technology exports rose on year in 2017 by 2.42 percent, to a record $353.87 billion, while imports increased by 8.17 percent to their own record – $464.26 billion.
>According to the new trade figures, which make fourth quarter, 2017 calculations possible, the growth drag on the U.S. economic recovery of the “Made in Washington” trade deficit worsened significantly from its third quarter levels.
>This shortfall is comprised of trade flows influenced heavily by American trade agreements and similar policies – i.e., trade in non-oil goods, where these measures have had much greater effects on imports and exports than they have in services trade and energy trade.
>As of the third quarter of 2017, the increase in this deficit since the current recovery began in mid-2009 had cut cumulative American inflation-adjusted growth by 16.36 percent, or $459.9 billion.
>The new trade figures peg this lost growth at 18.47 percent of the recovery total, or $538.89 billion.