Export gains could boost 4th-quarter U.S. growth

Associated Press photo by NICK UT -- Containers are unloaded from cargo ships at APM Terninals in the Port of Los Angeles in December. The federal government reported Friday that the U.S. trade deficit narrowed in December.
Associated Press photo by NICK UT -- Containers are unloaded from cargo ships at APM Terninals in the Port of Los Angeles in December. The federal government reported Friday that the U.S. trade deficit narrowed in December.

A jump in energy-related exports and a steep decline in oil imports lowered the U.S. trade deficit in December to nearly a three-year low.

The improvement suggests the economy grew in the October-December quarter instead of shrinking as the government estimated last week.

A brighter outlook for trade also illustrates how a boom in oil and gas production is reducing crude oil imports and making the U.S. a leader in the export of fuels. And it shows that higher domestic sales of fuel-efficient cars are lowering dependence on oil.

The trade gap fell nearly 21 percent in December from November to $38.6 billion, the Commerce Department said Friday.

Total exports rose 2.1 percent to $186 billion, driven in part by record exports of gasoline, diesel and other fuels.

At the same time, imports declined 2.7 percent to $225 billion. That was largely because oil imports plunged to 223 million barrels — the fewest in 15 years.

“While we may see some give back in the coming months … the trend of a narrowing petroleum trade gap will continue to drive improvement in the overall trade balance,” Michael Dolega, an economist at TD Bank, said in a note to clients.

A narrower trade gap boosts growth because it means U.S. companies earned more from overseas sales while consumers and businesses spent less on foreign products.

Fewer exports were one of the reasons the government’s first estimate of economic growth in the October-December quarter showed a contraction at an annual rate of 0.1 percent. The December trade deficit figures were not available when the government reported its estimate last week.

Some of the gain from trade will be offset by a decline in December wholesale stockpiles.

U.S. wholesalers cut their stockpiles slightly in December while their sales were unchanged, suggesting businesses were cautious at the end of a weak quarter.

The Commerce Department said Friday that wholesale business stockpiles dipped 0.1 percent in December from November to $497.7 billion. That followed a 0.4 percent rise the previous month.

Inventories of furniture and automotive goods fell by the most in more than three years. Farm product stockpiles also dropped sharply, likely reflecting the impact of this summer’s drought in the Midwest.

Less restocking reduces factory production, which slows economic growth.

Overall, economists at Barclays Capital expect the government’s second estimate for fourth-quarter growth will be revised up to a still-weak annual rate of 0.3 percent.

The monthly trade figures can be volatile. Still, economists see the trade picture brightening in 2013, helped by new technology that has made U.S. fuel cheaper.

Increased production has lowered U.S. prices of crude oil and natural gas, which refiners use to make gasoline, diesel and other fuels. Crude in the U.S. has been selling for $20 per barrel cheaper than international crude. U.S. natural gas is half the price of natural gas in Europe and one-third the price in Asia.

With lower input costs, U.S. refiners are making enormous amounts of petroleum-based fuels and selling them on the international market at a huge profit.

For all of 2012, the trade deficit narrowed 3.5 percent to $540.4 billion.

Many economists believe that trade will give the economy a small lift in 2013. That forecast is based on an assumption that the European debt crisis will stabilize, helping boost U.S. exports to that region, and economic growth in Asia will continue to rebound.

“The drag from Europe has lessened,” said Mark Vitner, an economist at Wells Fargo.

The politically sensitive trade deficit with China rose to $315.1 billion last year, the largest on record with any country. That could add to pressure on the Obama administration and Congress to take a harder line on China’s trade practices. Some U.S. manufacturers contend that China keeps the value of its currency artificially low to make its exports to the U.S. cheaper.