The report was the monthly balance-of-trade report from the Bureau of Economic Analysis, and it not only featured December's figures, but the preliminary year-long figures for 2017. And both the monthly and annual numbers showed a trade deficit on the rise.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $53.1 billion in December, up $2.7 billion from $50.4 billion in November, revised. December exports were $203.4 billion, $3.5 billion more than November exports. December imports were $256.5 billion, $6.2 billion more than November imports.This means that imports rose to an all-time record for 2017, and exports also rebounded in America after two years of declines.
The December increase in the goods and services deficit reflected an increase in the goods deficit of $2.6 billion to $73.3 billion and a decrease in the services surplus of $0.1 billion to $20.2 billion.
For 2017, the goods and services deficit increased $61.2 billion, or 12.1 percent, from 2016. Exports increased $121.2 billion or 5.5 percent. Imports increased $182.5 billion or 6.7 percent.
Those figures would be expected with a US and world economy that continued to grow in 2017. And locally, Wisconsin Republicans touted the state's increased overseas sales as proof that things were going well at the state level.
ICYMI: Wisconsin exports went up 6.1% in 2017! This boost is yet another example of the economic success we experienced in 2017 & is a trend we expect will continue as more companies access new markets & new customers through exporting. https://t.co/c3h9UEhnaL— Governor Walker (@GovWalker) February 8, 2018
And the $22.3 billion in Wisconsin exports cements trade as an important part of WIsconsin's economy. But when the country's exports grew by 5.5% overall, it simply means Wisconsin was joining in the increase that much of the rest of the nation saw. In fact, this article from the Milwaukee Business Times says that the 6.1% increase only placed Wisconsin 26th of the 50 states for export growth.
On the flip side, the state's trade deficit grew at a notably faster rate than the rest of the US.
Wisconsin’s imports were also up, increasing $5.3 billion or 23.6 percent to $27.8 billion. The state’s increase was the fourth largest in the country but Wisconsin remained 22nd for total imports.And let's take a minute to talk about overall trade deficits, because 2017 wasn't just a rebound from a couple of stagnant years in this front- it represented the largest trade deficit since before the Great Recession, and December's deficit was the largest in any month since before the 2008 financial crisis shut down trade.
Wisconsin Congressman Mark Pocan noted the increased deficit in 2017 didn't exactly match up with President Trump's campaign talk about "getting tough on trade".
.@realDonaldTrump is once again breaking promises he made to the American people. Today's broken promise: the U.S. trade deficit. Over the last year, the trade deficit increased to $556 billion - the highest it's been since 2008. https://t.co/zZCMuDpR9g— Rep. Mark Pocan (@repmarkpocan) February 6, 2018
Realistically, we shouldn't be too surprised by this jump in the trade deficit. After all, the US savings rate has plummeted back to pre-Recession levels, and given that people are consuming so much, it seems natural that some of that would come from overseas.
Now the question is whether this trade deficit is a bad thing, and a sign of bad things to come? I'm not as sanguine about free trade as the typical Econ person tends to be, because I do think that corporations have abused low tariffs by allowing it to be a reason to offshore jobs and cut wages in America while grabbing major profits for themselves. But it is noteworthy that manufacturing employment has risen by 186,000 in the last 12 months measured, which was a nice reversal from the drops we saw last year. So at least that part of Trump's big talk is holding up, even if our trade deficit is widening (FYI, the goods deficit rose by $58 billion in 2017 to a total of $810 billion).
But the catch-22 is that one major way to encourage exports is to lower the value of dollar (which did drop in 2017 vs many overseas currencies). And that'll raise the prices of those imports that we keep buying more reliant on. Combine that with the return of $1 trillion fiscal deficits (especially after this last budget deal), and you've got a situation that causes interest rates to keep going up, making a crash of our Bubbly assets even more likely.
Like a lot of other things we've seen in recent months, just because our trade deficit is on the rise, it doesn't mean a disaster is imminent (even with the craziness in the stock market over the last 2 weeks). But the resemblances to the 2nd term of George W. Bush are quite remarkable, and we'd be crazy not be concerned about seeing the economic awfulness of the Aughts repeating themselves.