Reading behind the numbers
The BEA released preliminary figures today for 2005q3 international transactions and revised figures for 2005q2.
Dec. 16 (Bloomberg) — The U.S. trade deficit unexpectedly widened to a record $68.9 billion in October, as imports of crude oil, automobiles and televisions increased, a government report showed. The U.S. current-account deficit unexpectedly narrowed from July through September, as insurance payments and donations from abroad poured in following Hurricane Katrina, a government report showed.
The deficit, the broadest measure of trade because it includes transfer payments and income from investments, shrank to $195.8 billion last quarter from a revised $197.8 billion the previous three months, the Commerce Department said today in Washington. It was the second straight narrowing after a record $198.7 billion in the first three months of the year.
The deficit is still likely to widen because demand for imported goods is rising as the economy grows, economists said. The trade deficit unexpectedly increased to a record $68.9 billion in October, as imports of crude oil, autos and televisions rose, a government report earlier this week showed.
“The insurance payments are going to go away,” said Jay Bryson, global economist at Wachovia Corp. in Charlotte, North Carolina. “The outlook remains very bleak.”
Two other notable points:
1. The net income account was 512 million, essentially zero. Even more interesting was the fact that the revised figure for 2005q2 was
-1.541 billion (both reported at quarterly rates, so multiply by 4 to get annual rates). The fact that the revised (and hence more reliable) numbers are negative suggest that the seeming paradox of a large negative US NIIP and a consistently positive entry on the net income account may be a thing of the past.
2. Debt payments on foreign owned US assets keep on rising. In 2004q1, such payments were $20.2 billion; in 2005q3 they were $30.1 billion. With short term rates likely to continue their upward climb for at least several more weeks, then 2005q4 figures should be even higher.
The entire release is at: