According to the latest data, the US economy is expected to recover in the fourth quarter. The data speculated that a sudden plummet in the GDP announced by the government last week is overstated. In last three years, the US trade deficit has tapered to the lowest level due to the drop in oil imports and a heave in exports.
The Commerce Department data stated that the country’s trade gap narrowed to US$38.5-billion during the month. However, the deficit is really a small amount than analyst anticipated. Chris Williamson, chief economist at Markit stated that the US economy has showed a steady recovery at the end of last year. The economic recovery is quite evident from the December data.
The Commerce Department showed an unexpected plummet in the wholesale inventories in 2012, December. As a result, it has offset some of the gains to GDP from trade. A combined analysis of the two report suggested that the Federal government may manage to revive in the fourth-quarter. Therefore, it shows that the economy contracted at a 0.1% annual rate.
Due to an unanticipated drop in exports, not enough gain in inventories, and push in the government spending on the military have led to the decline in the GDP. Barclays stated, in spite of December’s plummet in wholesale inventories, GDP increased by 0.3% in the fourth quarter. According to the trade report, this is due to the unexpected increase in the export number.
In December, the US export mounted by US$8.6-billion; thereby improved the sales number of the industrial supplies. This also helped to boost the price of non-monetary gold by US$1.2-billion.
There is an unexpected rise in the output of oil and natural gas along with a rise in the petroleum export by US$1-billion approximately.
In December, a drop in petroleum imports in the US managed to lower the purchase and helped to save US$4.6-billion. Since 1997, the import level of crude oil dropped by a huge volume in the US.
The investors in the US were extremely impressed with the Trade data, so it helped to boost the prices for US stock. In January 2013, the US as well as China both managed to show stronger exports and imports. As a result, it handled to lower the prices for U.S. government debt.
Unfortunately in 2012, the trade gap fell by 3.5% to US$540.4-billion in the US. There has been a huge loss due to the running trade deficit; therefore trade took a heavy toll on the US economy. However, improved export market helped to lower the drag on the U.S. economy, than the previous years.
In reality, the global trade deficit reduced but it grew with China during the year. The American manufacturers wanted the US to create pressure on the eminent Asians to build up the value of the currency.
Scott Paul, president of the Alliance for American Manufacturing, added that the Congress and the administration must take on currency manipulation. However, the US imports surpassed China and reached to a record high. Nevertheless, the America’s exports also increased in comparison to the country.
According to the report of the Commerce Department, the stocks of unsold goods at U.S. wholesalers fell by 0.1%, during the month. However, the stock price did not increase as anticipated in November. But the economists are still positive about the rise in wholesale inventories by 0.4%.
Therefore, the anticipation of Trade data about the US economic recovery in the fourth quarter may turn out to be true.
Author Bio: John is a financial writer associated with many financial forums like http://www.debtconsolidationcare.com/ He offers advice to debt stricken consumers who are struggling to come out from the trap of debt.