US oil imports at lowest level since 1999 as trade gap shrinks
The data lighten the US economic outlook after a negative fourth-quarter report. Forecasters predict modest economic growth in 2013. But the trade gap is still huge.
America’s trade deficit shrank in the final month of last year – from $48.6 billion in November to $38.5 billion in December – in part because imports of oil fell to their lowest level since 1999.
That news, released by the Commerce Department Friday, is an encouraging indicator that America is using energy more efficiently, and making more energy at home, reducing the country’s reliance on imported oil.
The positive news in the trade report didn’t stop with energy.
Overall US exports rose, which is encouraging on two fronts. First, it’s a vital source of US jobs. Second, it shows a bit of pep in global demand at a time when some forecasters had been warning of economic weakness outside the United States.
The improvement in America’s foreign trade picture also provides a surprise boost to estimates of the economy’s overall performance. Where the Commerce Department had originally reported a 0.1 percent decline in gross domestic product for the fourth quarter of 2012, it now appears very likely that a revised estimate this month will show some growth in that fourth-quarter GDP figure.
“Trade data for December paint a reassuring and encouraging picture of the US economy at the end of last year,” said economist Chris Williamson of the data supplier Markit, in a written analysis.
That, in turn, gives him a positive take on the global economy as 2013 begins. He says the government data are beginning to confirm what he sees in business surveys: "that global economic growth is reviving at the start of 2013, assisted by rising trade flows.”
The US, Mr. Williamson says, is an important driver of the progress.
Forecasters generally predict modest growth for the US economy during 2013, perhaps accelerating a bit near year’s end. That, coupled with stability in many developing economies, promises to offset weakness in much of Europe.
- The trade deficit is still high, with many economists calling for continued “rebalancing” through growth in exports. The gap between exports and imports totaled $540.4 billion in 2012, down from about $560 billion in 2011.
- The oil and gas picture is improving. The trade deficit for petroleum-based goods alone shrank from $326 billion in 2011 to about $291 billion last year. That’s still a big deficit, but oil imports fell by about $24 billion. Meanwhile, petroleum-related exports rose by more than $10 billion. According to analysis of the data by IHS Global Insight, an international consulting group, oil imports in December hit their lowest level since December 1999.
- Trade in services is growing in importance alongside goods. Exports of US services, from travel to royalties, have jumped by nearly $80 billion since 2010, and totaled $632 billion last year.
- When looking at major categories of goods, the US posts a trade surplus in food – more exports than imports – and fairly narrow deficits in capital goods like machinery. But when it comes to cars, industrial supplies (think oil), and consumer goods, the US imports a lot more than it exports. The US trade gap in “advanced technology products” was nearly $92 billion last year.
The improving trade picture doesn’t mean the US economy can rest on its laurels.
Manufactured imports “increased considerably faster” than the 5 percent gain in manufactured exports last year, according to an analysis by Alan Tonelson of the US Business and Industry Council, a group that promotes domestic manufacturing.