December trade in intangibles – and annual

Remember that big jump in the trade deficit for November that BEA reported last month? Well, things might have been a little better than normal in December. This morning, the BEA said the December trade deficit was $38.5 billion (compared to November’s revised figure of $48.6 billion). Exports were up by $3.9 billion over November and imports down by $6.2 billion. The best part of this news is that the December deficit was the smallest all year and the goods deficit was the smallest all year at $56.2 billion. In fact, it is the smallest deficit in almost 3 years: January 2010 was smaller. In fact, other than the dramatic decline of the trade deficit in the summer of 2009 at the height of the Great Recession, one has to go back to 2002 to find sustained deficits as low. The improvement in the deficit was due in large part to a decrease in the petroleum trade deficit (see chart below). The deficit in non-petroleum goods returned to it more normal level after surging in November.
By the way, the November revisions and the better than expected December report will likely cause a major revision upward in the 4th quarter GDP number released last week. Economists estimates for the trade deficit ranged from $42.3 billion to $48 billion.
For the year, the overall trade deficit was down slightly to $540.4 billion compared to $560 billion in 2011 but substantially up from the $494.7 billion deficit in 2010.
Our trade surplus in intangibles also improved in December (it has actually dropping in November). Exports of business services rose faster than the increased import, resulting is a higher surplus in business services. However, royalty payments (imports) great faster than royalty receipts (exports), so the surplus in royalties was down slightly. As a result, our overall surplus in intangibles grew by $157 million to $14.5 billion.
A dramatic drop in the Advanced Technology Products (ATP) deficit also helped. The ATP deficit declined to just under $5.4 billion in December — a drop of over half from November’s almost $11.8 billion. A large decrease in information & communications technology imports and an increase in aerospace exports accounted for much, but not all, of the improvement. The last monthly surplus in Advanced Technology Products was in June 2002 and the last sustained series of monthly surpluses were in the first half of 2001.
Intangibles trade-Dec12.png
Intangibles trade-2012.png
Intangibles and goods-Dec12.png
Intangibles and goods-2012.png
Oil good intangibles-Dec12.png

Note: we define trade in intangibles as the sum of “royalties and license fees” and “other private services”. The BEA/Census Bureau definitions of those categories are as follows:


Royalties and License Fees – Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term “royalties” generally refers to payments for the utilization of copyrights or trademarks, and the term “license fees” generally refers to payments for the use of patents or industrial processes.


Other Private Services – Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term “affiliated” refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise’s voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.

One thought on “December trade in intangibles – and annual”

  1. January trade in intangibles – and annual revisions

    So much for last month’s good news on trade. This morning, the BEA announced that the January trade deficit jumped by $6.3 billion to $44.4 billion. Exports were down by $2.2 billion while imports were up by $4.1 billion. The…

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