Could the continued imbalance of trade bring a halt to the scorching hot US economy? In November the US trade deficit increased to $50.5 billion from $48.9 billion the month before.
It is the first time the deficit has reached over $50 billion since March of 2012. So here we go. Some will say it’s a sign of the economic apocalypse that we are consuming more than we produce. Others will say that it is great that our manufacturing is so strong that we can leverage our strong trading position for even higher purchasing power. And the truth is, of course, somewhere in between.
How did it happen? Exports rose 2.3 percent in this quarter, but imports rose 2.5 percent.
So, is it just another piece of positive news that should be no surprise given the current boom in the economy, or is it a furtherance of the black hole of gluttony that at this point in our history is structural and will not end until things get really ugly?
And most importantly, what does it mean for the freight industry?
Frankly, any positive growth in either imports or exports is a boon for the transportation industry. There was a 2.3 percent rise in hauls to the port and a 2.5 percent rise in loads away from the port adding up to a 4.8 percent growth in goods that need to be put on a truck, a train, a ship, a plane or a combination of any of these.
So did the transportation sector really grow that much this past quarter. To really make sense of the situation you must look at the “real” trade deficit.
The real trade deficit (or I guess there could possibly be a surplus, but let’s get real) are the nominal import and export figures that are adjusted to reflect international pricing, exchange rates, and other factors that skew the true value of international trade.
Analysts argue that this real trade imbalance is going to damage the fourth quarter GDP results as it deteriorated rapidly in October and November and is looking like the trend continued for December.
According to Kay H. Bryson, global economist at Wells Fargo Securites, “Real net exports of goods and services provided modest positive contributions to overall GDP growth in the first three quarters of 2017, but it appears that the string will end in the last quarter of the year, because real net exports of goods deteriorated significantly in October and again in November.”
Could this slower quarter prove to be a harbinger for the U.S. economy and, as a result, its driving force, the transportation industry.
"If real exports and real imports in December remain at their respective November levels, then real net exports would slice more than one percentage point off of the topline GDP growth rate in the fourth quarter,” said Bryson.
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