econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 11 October 2015

Growing Headwinds To Third Quarter 2015 GDP. Is This An Economic Yellow Flag?

Written by Steven Hansen

As you know, imports are subtracted from GDP. Partially due to the dollar strength - exports are falling and imports are marginally growing. The end result is that the trade deficit grows, and GDP declines.

This past week, I did an analysis of trade data. The unadjusted three month rolling average value of exports decelerated month-over-month - but imports accelerated. Export rolling averages are now in contraction year-over-year.

  • Historically, import goods growth has positive implications for the economy - and the seasonally adjusted goods and services imports were reported up month-over-month. Econintersect analysis shows unadjusted goods (not including services) growth acceleration of 2.5% month-over-month (unadjusted data).The rate of growth 3 month trend is accelerating.

Inflation Adjusted But Not Seasonally Adjusted Year-over-Year 3 Month Rolling Average - Goods Export (blue line) and Goods Import Excluding Oil (red line)

(click to enlarge)

z trade2.PNG

  • The decrease in seasonally adjusted exports was generally across the board except for consumer and capital goods which increased. Import increase was due to consumer and capital goods.

  • The market expected (from Bloomberg) a trade deficit of - $50.2 B to - $41.0 billion (consensus - $48.6 billion deficit) and the seasonally adjusted headline deficit from US Census came in at - $48.3 billion.

  • It should be noted that oil imports were down 17 million barrels from last month, and up 4 million barrels from one year ago.

  • The data in this series is noisy, and it is better to use the rolling averages to make sense of the trends.

The headline data is seasonally adjusted ( but not adjusted for inflation)d. Econintersect analysis is based on the unadjusted data, removes services (as little historical information exists to correlate the data to economic activity), and adjusts for inflation. (Also, there is some question whether this services portion of export/import data is valid in real time because of data gathering concerns.) Backing out services from import and exports shows results graphically as follows:

Inflation Adjusted But Not Seasonally Adjusted Year-over-Year Change Goods Export (blue line), Goods Import Excluding Oil (red line), and Goods Import with Oil (yellow line)

(click to enlarge)

z trade1.PNG

Growing exports is a sign of an expanding global economy (or at least a sign of growing competitiveness).

Seasonally Adjusted Total Imports (blue line), Exports (red line) and Trade Balance (green line)

Indexing the data to the end of the recession, here is a look at the relative growth of imports and exports using current dollars as the basis for the index.

Seasonally Adjusted Total Imports (blue line) and Exports (red line) indexed to the End of Recession

(click to enlarge)

Econintersect is most concerned with imports as there is a clear recession link to import contraction. Adjusting for cost inflation allows apples-to-apples comparisons in equal value dollars between periods. The graph below uses seasonally adjusted data.

Seasonally and Inflation Adjusted Year-over-Year Change Imports (blue line) and Exports (red line)

Note: In general this is a rear view look at the economy - however, imports do have a forward vision of up to three months ahead of expected economic activity. One would think this could be a "yellow flag" for the economybecause the trend (blue line) is slightly down since late 2014. Econintersect will continue to monitor.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Was Marx Right?
Angst in America, Part 4: Disappearing Pensions
News Blog
Fact Check: Are A Million African Migrants Already On Their Way To Europe?
Doctor Google Will See You Now
What We Read Today 27 April 2017
March 2017 Philly Fed Coincident Index Ticks Marginally Up
What Is 5G
April 2017 Kansas City Fed Manufacturing Remains Positive But Declines
March 2017 Pending Home Sales Seasonally Adjusted Index Declines
Durable Goods New Orders Improved in March 2017
22 April 2017 Initial Unemployment Claims Rolling Average Marginally Improves
Infographic Of The Day: These Are The Countries Most and Least Prepared For Cyber Attacks
Documentary Of The Week: History Of The World From The Beginning Of 'Time'
The Four Factors That Decide How We Feel About Income Inequality
Why Mexican Immigrants Are Healthier Than Their US-born Peers
Investing Blog
Facebook Is Coming After Snapchat From All Sides
Know Your Energy Sector
Opinion Blog
It's Up To Congress
Squeezing The Philippine Peso
Precious Metals Blog
A New Age For Gold
Live Markets
27Apr2017 Market Close: Wall Street Closes In The Green With Nasdaq Grabbing The 'Golden Ring' Crossing 6,000, WTI Crude Climbs Back Into The 49 Handle, US Dollar Slips Off Session Highs
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved