At first glance the contraction in the trade deficit for October looks positive. I’m generally wary of seasonally adjusted data — not because seasonal effects don’t exist but because I prefer to see the raw data and the algorithm used to do the smoothing. Non seasonally adjusted data for the trade in goods is available here.
A seasonal plot of the trade deficit, derived from 22 years of data, is shown in the next chart.
From that chart we see that October is typically a larger deficit month. That should mean that a reduction in the month-on-month deficit in October 09 is good news. However October (along with March) is typically the biggest month for exports, and October is the biggest month for imports. While exports of goods grew 9.7% in October, compared to an average October growth of 7.4% from 1987-2008, imports were up 3.9% rather than the 8% seen on average from 87-08. Does that signal weak consumer demand? That interpretation seems consistent with what we know about retail sales and rail freight movements.
Outbound and inbound container movements from the ports of Los Angeles, Long Beach and New York/New Jersey are shown next. Note the clear seasonal pattern in the inbound container data.
The outbound container data, while oscillating a bit, seems fairly flat.
Is this data positive? At best we need to see how the data tracks between now and the end of Q1 2010 but to me it looks more indicative of an L shaped recovery than an indication of a V shaped rebound that many are wishing for.
(Mathematica was used for all retrieving, processing, and presenting of data in this article)
