U.S. December Advance Goods Trade Deficit surges while inventories dip, bringing downside risk to Q4 GDP
December’s advance goods US trade deficit of $122.1bn from $103.5bn in November is sharply wider than expected and a record high. This means some downside risk to Q4 GDP, particularly with advance inventory data for December negative, wholesale at -0.5% and retail at -0.3%.
The trade detail shows a sharp 4.5% decline in exports to more than fully reverse a 3.3% increase in November that is a surprise. A 3.9% rise in imports following a 4.3% increase in November is less of a surprise given the desire to beat potential tariffs.
Export weakness was broad based but import strength was led by a surge of 18.9% in industrial supplies. It is surprising that the rise in imports did not lift inventory data, though durable goods inventories did see a 0.4% increase in data released yesterday, partially ioffsetting the weakness of retail and wholesale data today.
