US Trade Deficit Continues at $45 Billion a Month

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The US international trade deficit in goods and services may have decreased to $45.3 billion in January from $48.6 billion in December (revised), as imports decreased more than exports. However, the Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

The drop in imports portends shortages, which could harm both consumer and business spending. The coronavirus epidemic has upset businesses and production in China, with an extension of  the Lunar Year holidays cutting output in an effort by the Chinese government to constrain its spread. This likely will be repeated in the US economy as the epidemic spreads here. It’s too soon to see the potential negative effects on the auto industry, but disruptions are likely given China, South Korea and Mexican trade in automotive goods.

The goods trade deficit with China increased 5.1% to $26.1 billion in January, with exports tumbling 18.7% and imports falling 1.2%.

Trade added an estimated 1.5 percentage points to GDP growth in the Q4, exceeding the 1.17 percentage points from consumer spending. However, consumer spending accounts for more two-thirds of U.S. economic activity.