These graphs are all consistent with the notion that Americans are spending as much as they can (0% savings rate) be it June or July. So we shouldn't expect a jump in the deficit from June to July that needs to be "corrected."
What we may be seeing is a "historesis" effect from previous years where Amercans traditionally spent more in July than in June.
Again, the 0% savings rate may be an important factor in this (because it is unprecendented in modern times.)
1) Oil increased $6 a barrel just like it did (unadjusted) from May to June 2005.
2) The UnAdjusted deficit rose $5 billion from May to June as a result.
3) I guess that the unadjusted deficit will rise 4-5 billion from July to August due to a similar jump in oil July-August.
4) I guess that the adjustment will reduce the deficit about $1 billion
5) 66.8 + 5 - 1 = 70.8
6) I'll subtract another $1 billion because the savings rate is so low, it may mitigate things a bit. It feels right.
7) 70.8 - 1 = 69.8
I'm not sure how much weight we want to attribute to the dollar in explaining trade swings. One of the points that has been made with increased frequency in recent years is that fx moves have less impact on trade when trade is dominated by multinationals. Another possible explanation for the greater relative stability of imports excluding oil and China is that, in addition to supplanting US production, Chinese immports are supplanting other imports. Imports excluding China are being held down by competition from China.
Thanks for the kudos
These graphs are all consistent with the notion that Americans are spending as much as they can (0% savings rate) be it June or July. So we shouldn't expect a jump in the deficit from June to July that needs to be "corrected."
What we may be seeing is a "historesis" effect from previous years where Amercans traditionally spent more in July than in June.
Again, the 0% savings rate may be an important factor in this (because it is unprecendented in modern times.)
I expect an adjusted deficit of 69.8 in August.
1) Oil increased $6 a barrel just like it did (unadjusted) from May to June 2005.
2) The UnAdjusted deficit rose $5 billion from May to June as a result.
3) I guess that the unadjusted deficit will rise 4-5 billion from July to August due to a similar jump in oil July-August.
4) I guess that the adjustment will reduce the deficit about $1 billion
5) 66.8 + 5 - 1 = 70.8
6) I'll subtract another $1 billion because the savings rate is so low, it may mitigate things a bit. It feels right.
7) 70.8 - 1 = 69.8
So 69.8 is it, give or take a bil.
vorpal, I think that estimate is high. Oil will add about $2 Billion NSA to the deficit in August (I work up some numbers soon).
My guess is the trade deficit will be around $60 Billion SA.
Best Regards.
I'm not sure how much weight we want to attribute to the dollar in explaining trade swings. One of the points that has been made with increased frequency in recent years is that fx moves have less impact on trade when trade is dominated by multinationals. Another possible explanation for the greater relative stability of imports excluding oil and China is that, in addition to supplanting US production, Chinese immports are supplanting other imports. Imports excluding China are being held down by competition from China.
CR, I forgot to subtract the services numbers. So those numbers are for goods only. So that'll knock 'er down ~4.6 bil
69.8 - 4.6 = 65.2 billion SA
I apologize for the confusion. I hate messing up like that.