• 15 hours Contrarian Investors Are Beating The Stock Market
  • 18 hours Bulgaria’s Revenue Agency Falls Victim To Biggest Cyber Heist In History
  • 21 hours Amazon Faces European Union Anti-Trust Probe
  • 23 hours Commodities Are Having A Stellar Year
  • 2 days Bezos’ Next Big Project Could Be Worth $100 Billion Per Year
  • 2 days 3,600 Years Later, Climate Change Turns Mammoths Into $40M Market
  • 2 days Tesla, Apple Claim China Is Stealing Intellectual Property
  • 2 days EV Giants Duke It Out For Battery Dominance
  • 3 days Tech Billionaire Takes Aim At Google
  • 3 days Chinese Police Bust Largest Ever Illicit Crypto Mining Operation
  • 3 days Expect A Pullback Before Gold's Next Major Rally
  • 3 days Why Interest On Gold Matters
  • 4 days Ten Extravagant Food Items For The Wealthy Only
  • 4 days Why Saudi Arabia Won't Give Up On The Aramco IPO
  • 5 days $32 Million Crypto Heist Halts Tokyo Exchange
  • 5 days Is A Gold Selloff Looming?
  • 6 days Central Banks Are Stashing Gold And Dumping Treasuries
  • 6 days Three Cannabis Trends Flying Under Investors’ Radars
  • 7 days $1.3 Billion In Cocaine Found On JPMorgan Vessel
  • 7 days Amazon Teams Up With Lady Gaga To Win Over Generation Z
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

  1. Home
  2. Markets
  3. Other

US Trade Deficit Sinks 5.2%; Gaming the GDP Effect; Food for Thought

This morning the The U.S. Census Bureau announced "Advance Numbers" for international trade, wholesale inventories, and retail inventories for September 2016.

The key line item is a decline in imports and a rise in exports. This will likely, but not necessarily, boost 3rd quarter GDP estimates.


Advance Trade and Inventory Numbers

Advance Trade and Inventory Numbers


Advance International Trade

Advance International Trade


Advance International Trade Details


Gaming the GDP Effect

Mish Tweet Gaming the GDP

Given that exports add to GDP and imports subtract from GDP, this report will undoubtedly add to GDP, subject to future revisions of course.


Gaming the Effect on GDP Model Estimates

Whether or not these numbers add to GDPNow and Nowcast models is uncertain. It all depends on how the numbers came in vs. what the models predicted.

I will take a stab that the advance trade report will add 0.1 to 0.2 percentage points to the 3rd quarter GDP estimates for both GDPNow and the FRBNY Nowcast.


New Home Sales

Earlier today I took a look at the impact of today's new home sales report on GDP model estimates.

Because of huge backward revisions, I am reasonably confident new home sales will subtract from GDP estimates. My estimate is 0.3 percentage points in a range of 0.2 to 0.4 percentage points. Deeper negative would not be surprising, but I estimated -0.3 percentage points to pick a number.


Food for Thought

Today's reports may very well offset each other. Nonetheless, some trade numbers provide food for thought.

  • Despite a rising dollar, consumer goods exports are up 4.4%.
  • Despite a falling dollar, consumer goods imports are down 1.8% but auto imports are up 4.3%.

Given that auto sales are on a slide, why are auto imports up big? And what does a decline in consumer goods exports suggest about Christmas season sales?

Note that food exports are down 12.8%. Does anyone recall the WSJ article that speculated soybean exports would cause a huge jump in third quarter GDP?


Related Articles

  1. September New Home Sales Lower than Consensus, July and August Revised Sharply Lower
  2. 3rd Quarter GDP at 4% Thanks to Soybeans?
  3. PMI Services Activity Jumps; Markit Estimates 2.0% GDP for 4th Quarter

 

Back to homepage

Leave a comment

Leave a comment