The Commerce Department said the December deficit was 10.4 percent higher than the November imbalance. It was much larger than the $36 billion deficit that economists had expected with much of the increase coming from a big jump in oil imports.
"Trade may support the U.S. recovery going forward but only marginally now that domestic demand is once again pulling in imports," Sal Guatieri, senior economist at BMO Capital Markets, said in a research note.
A bit of old news.
Increased trade, often viewed as a solution to, is also a source of our economic woes. A country the consumes more than it produces must settle its transactions with the issuance of debt obligations (paper) that pulls from future consumption. Since debt issuance is finite - limited by a country's finite ability to service and repay the debt, production (exports) must rise or consumption must decline to ease the growing imbalance.
Imports to Exports Ratio (Census Basis):
What caught my attention was the year-over-year change in import prices - 8%. Granted, a good chunk of that was due to rising price of oil. Persistent, multi-month increases in import prices, however, will not be limited to oil imports. Made outside the USA will carry a higher price tag as well. Retailers will let their margins compress for only so long before raising prices.
Import and Export Price Change YOY:
Source: finance.yahoo.com
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