BEA's trade data for December showed an unexpected increase in the deficit, up to $40.2 billion from November's revised $36.4 billion. Our trade surplus in intangibles also went in the wrong direction as well, declining slightly by $68 million (chart one). Exports of business services declined, while imports increased. Royalties exports (payments received) and imports (payments out) both increased, with exports running slightly higher than imports. Revisions to last month's data show that, contrary to previous analysis, exports of business services increased in November.
Chart 1
Our worsening goods deficit continues to completely overwhelms our intangibles surplus (chart two). The overall decline was in our trade balance was completely due to a surge in petroleum imports. Exports and imports of non-petroleum goods increased, but balanced out leaving the deficit in non-petroleum goods basically unchanged (chart three).
Chart 2
Chart 3
Overall, 2009 saw a decline in our intangibles trade surplus - dropping to $135 billion from $145 billion in 2008. Exports took the biggest hit, declining by almost 3.6%. Imports were generally steady with a minor decline of about 0.9% (See chart four). Total trade in intangibles declined by 2.6% - although the percentage of intangibles that makes up the total US trade rose dramatically (see chart five). The reason for that spike is the fall off of total trade last year, not anything to do with intangibles.
Chart 4
Chart 5 
The good news is that our deficit in Advanced Technology Products decreased markedly in December, down to $4.9 billion from November's $8.3 billion. In part, the improvement was due to higher exports and lower imports of information and communications technologies. Exports of aerospace technologies also surged, indicating that the improvement might be only short-term. And BEA and the Census Bureau note that exports were over stated by $500 million because of non-disclosure requirements. 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.
One final point: as I noted in my earlier posting about the 4thQ GDP numbers, the GDP estimates are likely to be revised based on new trade data. We now have that data -- and it is worse than expected. So look for the GDP number to be revised downward.
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.
Our worsening goods deficit continues to completely overwhelms our intangibles surplus (chart two). The overall decline was in our trade balance was completely due to a surge in petroleum imports. Exports and imports of non-petroleum goods increased, but balanced out leaving the deficit in non-petroleum goods basically unchanged (chart three).
Overall, 2009 saw a decline in our intangibles trade surplus - dropping to $135 billion from $145 billion in 2008. Exports took the biggest hit, declining by almost 3.6%. Imports were generally steady with a minor decline of about 0.9% (See chart four). Total trade in intangibles declined by 2.6% - although the percentage of intangibles that makes up the total US trade rose dramatically (see chart five). The reason for that spike is the fall off of total trade last year, not anything to do with intangibles.
The good news is that our deficit in Advanced Technology Products decreased markedly in December, down to $4.9 billion from November's $8.3 billion. In part, the improvement was due to higher exports and lower imports of information and communications technologies. Exports of aerospace technologies also surged, indicating that the improvement might be only short-term. And BEA and the Census Bureau note that exports were over stated by $500 million because of non-disclosure requirements. 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.
One final point: as I noted in my earlier posting about the 4thQ GDP numbers, the GDP estimates are likely to be revised based on new trade data. We now have that data -- and it is worse than expected. So look for the GDP number to be revised downward.
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.
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