Regular agency reports that were released this week included the Commerce Department’s report on our International Trade for December, and the December report on Wholesale Trade, Sales and Inventories from the Census Bureau….also this week, the Fed released the Consumer Credit Report for December, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $11.6 billion, or at a 2.9% annual rate, as non-revolving credit expanded at a 1.5% rate to $3,579.9 billion, while revolving credit outstanding grew at a 7.3% rate to $1,196.0 billion…for the year, consumer credit increased by 7.8 percent, with revolving credit increasing 14.8 percent and non-revolving credit increasing 5.6 percent…
The major private report released this week was the Mortgage Monitor for December from Black Knight Financial Services, which indicated that 3.08% of all mortgages were delinquent in December, up from 3.01% in November, but down from the 3.38% delinquency rate in December of 2021, and that 0.37% of all mortgages were in the foreclosure process, the same percentage that were in foreclosure in November but up from the record low 0.24 of mortgages that were in foreclosure in December a year ago…
Trade Deficit Rose 10.5% in December, Was Up By 12.4% in 2022
Our trade deficit rose 10.5% in December as the value of our exports decreased and the value of our imports increased….the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit increased by $6.4 billion to $67.4 billion in December, from a revised November deficit of $61.0 billion, which was previously reported at $61.5 billion….the value of our December exports fell by a rounded $2.2 billion or 0.9% to $250.2 billion on a $2.9 billion decrease to $168.1 billion in our exports of goods which was partly offset by a $0.7 billion increase to $82.0 billion in our exports of services, while the value of our imports rose by a rounded $4.2 billion or 1.3% to $317.6 billion on a $4.5 billion increase to $258.8 billion in our imports of goods, which was partly offset by a $0.3 billion decrease to $58.8 billion in our imports of services…with this report, the seasonally adjusted goods data for every prior month of 2020 were revised, which thus means that previously published quarter over quarter figures for GDP would need to be revised as well…export prices were on average 2.6% lower in December, which means the decrease in the nominal value of our exports for the month was all price related, and that our real exports likely rose on the order of 1.7%, while import prices averaged 0.4% higher, suggesting that the increase in real imports was smaller than the nominal dollar increase reported here by roughly that percentage…
The $2.2 billion decrease in the value of our December exports of goods was due to lower exports of industrial supplies and materials and consumer goods, which were partly offset by higher exports of foods, feeds and beverages…referencing the Full Release and Tables for December (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials fell by $3,090 million to $62,948 million on a $1,578 decrease in our exports of non-monetary gold, a $788 increase in our exports of crude oil, a $621 million decrease in our exports of petroleum products other than fuel oil, and a $324 million decrease in our exports of raw cotton, which were partially offset by a $472 million increase in our exports of natural gas, and that our exports of consumer goods fell by $1,022 million to $19,948 million on a $389 million decrease in our exports of jewelry and a $22 million decrease in our exports of pharmaceutical preparations…in addition, our exports of those goods not categorized by end use fell by $21 million to $6,906 million….partly offsetting the decreases in those export categories, our exports of foods, feeds and beverages rose by $665 million to $14,146 million on a $441 million increase in our exports of corn, our exports of automotive vehicles, parts, and engines rose by $517 million to $14,450 million as a $787 million increase in our exports of new and used passenger cars was offset by a $414 million decrease in our exports of trucks, buses, and special purpose vehicles, and our exports of capital goods rose by $146 million to $45,020 million as a $628 million increase in our exports of civilian aircraft and a $327 million increase in our exports of engines for civilian aircraft was mostly offset by a $580 million decrease in our exports of industrial machinery not otherwise itemized and a $373 million decrease in our exports of semiconductors..
Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that greater imports of consumer goods and of automotive vehicles, parts, and engines more than accounted for our $4.5 billion increase in imports, as their increases were partly offset by lower imports of imports of industrial supplies and materials….our imports of consumer goods rose by $4,100 million to $63,135 million on a $3,508 million increase in our imports of cellphones, a $393 million increase in our imports of textile apparel and household goods other than those of cotton or wool, a $372 million increase in our imports of cotton apparel and household goods, and a $330 million increase in our imports of artwork and other collectibles, which were slightly offset by a $320 million decrease in our imports of furniture, while our imports of automotive vehicles, parts and engines rose by $2,898 million to $35,195 million on a $1,623 million increase in our imports of new and used passenger automobiles, a $662 million increase in our imports of automotive parts other than engines, chassis, and tires, and a $391 million increase in our imports of trucks, buses, and special purpose vehicles…in addition, our imports of foods, feeds, and beverages rose by $15 million to $16,700 million, and our imports of goods not categorized by end use rose by $523 million to $10,415 million…partly offsetting the increases in those import categories, our imports of industrial supplies and materials fell by $2,745 million to $59,648 million on a $824 million decrease in our imports of fuel oil, a $756 decrease in our imports of organic chemicals, and a $376 million decrease in our imports of natural gas, offset in part by a a $306 million increase in our imports of steelmaking materials, and our imports of capital goods fell by $2 million to $71,461 million as a $481 million decrease in our imports of telecommunications equipment and a $653 million decrease in our imports of computer accessories were offset by a $333 million increase in our imports of computers and a $413 million increase in our imports of civilian aircraft….
The press release for this month’s report also summarizes Exhibit 19 in the pdf, which gives us surplus and deficit details on our goods trade with selected countries…
The December figures show surpluses, in billions of dollars, with South and Central America ($5.1), Netherlands ($4.4), United Kingdom ($1.9), Australia ($1.5), Hong Kong ($1.3), Belgium ($1.1), Brazil ($0.9), and Singapore ($0.2). Deficits were recorded, in billions of dollars, with China ($22.8), European Union ($18.6), Mexico ($12.0), Vietnam ($8.1), Germany ($8.0), Japan ($7.2), Ireland ($5.8), Canada ($4.5), Italy ($4.2), South Korea ($4.0), India ($3.3), Taiwan ($3.0), Switzerland ($2.6), Malaysia ($2.5), France ($1.2), Israel ($0.7), and Saudi Arabia ($0.7).
- The deficit with China increased $3.0 billion to $22.8 billion in December. Exports decreased $1.0 billion to $12.6 billion and imports increased $2.0 billion to $35.4 billion.
- The deficit with Japan increased $1.6 billion to $7.2 billion in December. Exports decreased $0.3 billion to $6.2 billion and imports increased $1.3 billion to $13.3 billion.
- The surplus with the Netherlands increased $2.0 billion to $4.4 billion in December. Exports increased $1.2 billion to $7.0 billion and imports decreased $0.9 billion to $2.6 billion.
For the full year, the revised trade figures now show that this year’s trade deficit increased by $103.0 billion, or by 12.2% from 2021 to $948.1 billion in 2022, on a $453.1 billion or 17.7% increase to $3,009.7 billion in our exports, and a $556.1 billion or 16.3% increase to $3,957.8 billion in our imports….the year over year increase in our exports was driven by increased exports of services, industrial supplies and materials, capital goods, and foods & feeds, and was led by a $63.8 billion increase in exports of travel services, a $47.5 billion increase in our exports of crude oil, a $28.1 billion increase in our exports of fuel oil, a $26.8 billion increase in exports of petroleum products other than fuel oil, a $26.5 billion increase in exports of business services other than those itemized in the report, a $22.9 billion increase in exports of natural gas and a $24.2 billion increase in our exports of transport services….meanwhile, the 2022 increase in our imports was driven by increased imports of industrial supplies and materials, capital goods, consumer goods and of services, and was led by a $65.1 billion increase in our imports of crude oil, a $56.1 billion increase in our imports of travel services, a $49.1 billion increase in our imports of transportation services, a $19.7 billion increase in our imports of electric apparatuses, a $19.0 billion increase in our imports of passenger cars, an 18.8 billion increase in our imports of pharmaceutical preparations, and an $18.3 billion increase in our imports of automotive parts and accessories other than engines, chassis, and tires….
In the advance estimate of 4th quarter GDP published two weeks ago, our December trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release…that report estimated that our seasonally adjusted December goods trade deficit was at $90.268 billion, up $7.336 billion from $82.932 billion in November on a Census basis, on a $2.629 billion decrease in goods exports to $166.784 billion and a $4.704 billion increase to $257.051 billion in imports of goods…this report revises that and shows that our actual Census basis goods trade deficit in December was at $89.671 billion, on adjusted goods exports of $166.884 billion and adjusted goods imports of $256.555 billion…at the same time, the November goods trade deficit was revised down from the $82.932 billion indicated in that advance report to $82.075 billion, and the October goods trade deficit was revised down from $98.640 billion to $98.119 billion…combined, those revisions from the previously published figures would suggest that the 4th quarter trade deficit in goods was roughly $1.975 billion less than the figures used for trade in the GDP report, or around $7.9 less greater on an annualized basis, which would add about 0.13 percentage points to 4th quarter GDP when the 2nd estimate is released at the end of this month….
Note that our trade in goods for July, August, September and October, which all go into figuring the quarter over quarter change in 4th quarter GDP, were also revised with this report as well, and since our GDP growth rate is a measure of the change from one quarter to the next, we should also adjust for changes in those months as well to get an accurate 4th quarter GDP read…however, the BEA will not revise 3rd quarter GDP figures until the annual revision late this coming summer, so the 4th quarter GDP reports that will be published at the end of February and at the end of March will not reflect the revised 3rd quarter trade figures included herein….however, since this month’s revisions are due to changes in the seasonal adjustments, the net trade deficit for the entirety of 2020 should not be affected…
For our trade in services, the BEA’s Key source data and assumptions (xls) for the advance estimate of fourth quarter GDP provides aggregate exports and imports of services at annual rates on an international-transactions-accounts basis, indicating that the BEA assumed a $12.5 billion increase in exports of services and a $1.8 billion increase in imports of services on an annual basis in December when computing 4th quarter GDP…while there is no comparable annualized metric or adjusted data in this trade report that we could directly compare that to, this release does show that exports of services rose $0.74 billion in December after November’s exports of services were revised $0.22 billion higher, and that imports of services fell $0.30 billion in December after November’s imports of services were revised $0.58 billion higher…after multiplying those monthly figures by 12 to approximate an annualized change, that suggests that the annual rate for December exports of services used in the GDP report was on the order of $1.0 billion too high, while the annual rate for December imports of services used in the GDP report was about $1.6 billion too low…applying those annualized differences, and also annualizing the services trade revisions for November vis a vis those reported in the GDP report in the same manner, the annual rate for 4th quarter services exports would be revised about $1.6 billion higher, while the annual rate for 4th quarter services imports would be revised about $8.6 billion higher…a resulting downward revision of $7.0 billion to our total services surplus in BEA terms should be enough to subtract about 0.11 percentage points from 4th quarter GDP….combining our estimated revisions to goods trade with those services revisions, it appears that revisions generated by this report would therefore add a net of about 0.02 percentage points to the 4th quarter GDP revisions when they’re released on February 23rd…
December Wholesale Sales Unchanged; Wholesale Inventories Up 0.1%
The December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $687.8 billion, virtually unchanged (±0.5 percent)* from the revised November level, but up 7.3 percent (±0.7 percent) from wholesale sales of December 2021… the November preliminary estimate was revised down to $688.052 billion from the $693.7 billion in sales reported last month, which meant the “October 2022 to November 2022 percent change was revised from the preliminary estimate of down 0.6 percent (±0.5 percent) to down 1.4 percent (±0.5 percent).“….as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….
On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on a shelf or in intermediate storage represent goods that were produced but not sold, and this December report estimated that wholesale inventories were valued at a seasonally adjusted $932.9 billion at month end, up 0.1 percent (±0.2 percent)* from the revised November level and 17.6 percent (±0.7 percent) higher than in December a year ago, with the November preliminary estimate revised lower, from $933.1 billion to $932.4 billion at the same time, now up 0.9 percent (±0.2 percent) from October….
In the advance report on 4th quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $934,073 million at the end of December, up from $932,749 million in November….that’s a net $1.5 billion more than the $932,931 billion and $932,368 billion that this report shows, which would imply that the quarterly change in 4th quarter wholesale inventories was overestimated at roughly a $6.0 billion annual rate…assuming there’s no distortion caused by reweighting the inflation adjustments to those inventories, that would mean that the growth rate of 4th quarter GDP was overestimated by around 0.09 percentage points based on what this report shows…
(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)
r.j.'s space 