The US trade deficit hit a record last year. From Reuters:
The U.S. trade deficit skyrocketed in 2005 to a record $725.8 billion, as American companies and consumers snapped up record levels of low-priced goods from China and high-priced oil from the Middle East, a U.S. government report on Friday showed.
The trade deficit, which has risen more or less steadily since 1991 when it was $30.7 billion, widened 17.5 percent in 2005 to set a record for the fourth year in a row.
December contributed to the record.
The December deficit totaled $65.7 billion, up 1.5 percent from a revised $64.7 billion in November, and in line with expectations before the report.
Both U.S. imports and exports set records in December in a sign of a strong consumer demand at home and improving growth in overseas markets that have lagged behind the United States.
U.S. exports increased 2.1 percent in December to $111.5 billion, led by record levels of capital goods, auto and auto parts and consumer goods.
Imports rose 1.9 percent to $177.2 billion with records in several categories, including capital goods, auto and auto parts and food, beverages and animal feed.
But economists expect the US economy to grow at a respectable pace in 2006.
Panelists surveyed in the Blue Chip Economic Indicators newsletter bumped up their projection for annualized gross domestic product growth in the first quarter to 4.1 percent from a prediction of 3.6 percent a month ago. That was well above the fourth quarter's anemic 1.1 percent growth pace.
The panelists cut their outlook for 2006 growth to 3.3 percent from 3.4 percent in January, predicting weaker growth in business spending than they expected a month ago.
Another country that has problems with recent GDP growth and trade deficits is France. From FT:
France’s economy slowed sharply in the final quarter of 2005, creating fresh doubts about the strength of the eurozone’s economic recovery.
Falling industrial production and sluggish consumer spending meant French gross domestic product was just 0.2 per cent higher than the previous three months, according to official data, well below government and economists’ forecasts. In the third quarter of last year, GDP had risen 0.7 per cent.
... Economists estimated that consumer spending...grew by just 0.3 per cent in the fourth quarter, against 0.7 per cent in the third quarter.
Thierry Breton, finance minister, blamed technical stoppages in the automobile sector for much of the 0.3 per cent drop in industrial production in the fourth quarter. Stressing that the estimates could still be revised upwards, Mr Breton stuck to his forecast of 2 to 2.5 per cent growth this year...
But in other grim news for France’s economy, its trade deficit hit a record €26.4bn last year, as high oil prices increased the cost of imported energy and buoyant consumers bought more imported products, offsetting an increase in exports.
Japan does not have problems with trade deficits, but it does have uneven growth in consumer spending. From Forbes/AFX:
Household spending in December averaged 346,230 yen, up 0.8 pct from a year before, the Ministry of Internal Affairs and Communications said.
However, household spending in December fell a seasonally adjusted 0.7 pct from November, declining for the fourth consecutive month.
There is more positive news in other parts of the Japanese economy. From Bloomberg:
Private machinery orders, excluding shipping and utilities, rose a seasonally adjusted 6.8 percent in December, the third straight month of gains, the Cabinet Office said today in Tokyo...
Orders rose 4.1 percent in the three months ended Dec. 31, the government said, predicting they may rise 1.3 percent in the first three months of this year, the sixth quarter of growth.
Meanwhile, the OECD sees continued growth in the OECD countries.
Moderate expansion lies ahead in the OECD area according to the latest composite leading indicators (CLIs). December data show improved or accelerating performance in the CLI's six month rate of change in each of the major seven economies with the most positive signals in Canada and the United States.
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