Source: Economics Group of Wells Fargo Bank, N.A.
Summary
After a sharp narrowing in 2023, the U.S. international trade deficit widened to start the year as a jump in imports offset a more modest increase in exports. All told, today’s data suggest some modest downside risk to Q1 real GDP growth.U.S. Trade Deficit Hits Eight Month Low
The U.S. international trade balance widened to $67.4 billion in January from a downwardly revised $64.2 billion a month prior. The steep widening came amid a jump in imports and only modest increase in exports. Specifically, imports rose $3.6 billion, or by 1.1%, while exports rose only $0.3 billion or 0.1%.
Capital goods imports were responsible for most of the pop, and the strength cannot be traced to any specific category. That is, computers & related goods and components of equipment all saw decent gains in January. The only two categories of capital goods to register sizable declines were the volatile civilian aircraft component (-$291 million) and laboratory testing instruments (-$125 billion). Outside capital goods, weakness in industrial supplies and capital goods was overstated by specific product. Crude oil imports pushed industrial supplies negative, while cellphones & other household goods accounted for nearly all the drop in consumer goods generally. Auto imports were fairly strong, though three previous consecutive monthly declines suggest the leap here is likely more monthly noise than the start of renewed strength.