June real trade balance
When the second quarter real GDP report was published I saw that trade made a major contribution to growth — exports contributed 1.12 percentage points of the 4.1% real GDP growth. But that seemed like some sort of fluke produced by unusual conditions rather that what trend growth would generate. Moreover, the BEA estimate was based on only two months actual data and the other month was a BEA “guesstimates”. So new data was quite likely to generate large changes in reported real GDP. June data was released this morning at the same time as the unemployment report, so it did not get much attention. Real exports increased and real imports imports declined. Both moved back toward their intermediate growth trend.
The trade balance is the difference between two very large numbers so that small changes in either series can generate very large changes in the trade balance. The June real trade deficit was $ 7.9 ( B 2012 $ ) as compared to $7.7 ( B 2012$) in April and $7.5 ( B 2012 $) in May. The June trade balance is about where is was at the end of the first quarter. So when the 2nd quarter real GDP is revised the major contribution from trade is likely to be revised down significantly.
here’s what i have written for the revision to trade in goods:
in the advance report on 2nd quarter GDP released last week, our June trade deficit was estimated based on the Advance Report on our International Trade in Goods which was also released last week, just before the GDP release…that report estimated that our June goods trade deficit was at $68,332 million on a Census basis, up from the $64,767 million goods deficit reported in May…this report revises those figures and shows that our actual goods trade deficit in June was $68,813 million on a balance of payments basis, and $67,920 million on a Census basis..at the same time, the May goods deficit was revised to $64,688 million on a Census basis…together, those revisions from the previously published data mean that the 2nd quarter goods trade deficit was roughly $491 million less than was included in last week’s GDP report, or roughly $2.0 billion more at an annual rate, which would indicate a upward revision of roughly 0.03 percentage points to 2nd quarter GDP when the 2nd estimate is released at the end of August…
eyeballing trade in services, citing the BEA’s key source data and assumptions (xls) for the advance estimate of second quarter GDP, it appear that the dimished services surplus would wipe out that small positive goods revision, but i have not tried to compute it yet…
Why are you using nominal data to estimate a change in real GDP?
because that’s the only data given in the advance trade report, and because i figure that the inflation factor is not likely to be revised much month over month…
i’m just shooting for a ballpark estimate, not rocket science…
good point, though, Spencer…i should at least explain that, or insert a caveat phrase such as “assuming no revision to the import and export price data”
The BLS reports import and export prices,
In June export prices rose 0.31% and import prices fell – 0.39%.
On a Y/Y basis export prices are up 5.35% and import prices rose 0.33%.
The Y/Y rise in consumer goods (excl. autos and energy) import prices is 0.28%.
Import and export prices relative to domestic prices suggest that the trade balance should continue to widen.
there has been a significant difference between the change in export prices and that of import prices; the 2nd quartet GDP components were deflated for 5.8% growth in export prices and 0.1% growth in import prices, and that made a big difference in the impact of thel growth of those components on GDP…however, when we’re talking about a small revision that’s just going to move GDP a few basis points, even the 0.7% difference between the export and import price change you cite for June isn’t going to be much of a statistically significant consequence…
i’m not familiar with the revision schedule for export/import prices…producer prices, which are used to deflate inventories and other GDP components, are revised in the 3rd and 4th months out..
here’s my paragraph on the impact of July’s trade in goods on GDP, based on the nonsense assumption that August and September goods trade figures will be unchanged from July…
note that i didn’t try to figure the impact of the change in services because the BEA does not provide inflation adjusted data on those….