The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

The Nov Trade Deficit widened to $36.4b, above expectations of $34.6b and up from a revised $33.2b in Oct. Exports did rise .9% m/o/m but imports grew at a faster pace, by 2.6%. Petro imports in particular rose by 2.3% but even taking out this influence, overall imports rose by 2.4%. Exports have now risen for a 7th straight month and follow the back in black GDP reports we’ve seen around the world. The higher than expected deficit, all else equal, will lead to a reduction in Q4 GDP estimates of .1-.2 of a %. The trade deficit peaked in July ’08 at $64.9b and the decline has been solely due to a huge reduction in imports than a gain in exports. Since July ’08, imports have fallen 24% while exports were down 16%. With respect to the US economy over the next few years, exports will be a key driver of its success as the US consumer continues its multi year retrenchment.