The US trade deficit and its (in)tangibles

As the US trade deficit widens to a record of $ 68.5 bn. we are yet again faced with the discussion of dark matter and intangibles a flurry I have reported on at several occasions. 

(from the FT)  - see also Edward Hugh.

"The US trade deficit ballooned to a record $68.5bn in January, far surpassing expectations and raising the prospect of a large drag on economic growth in the first months of the year.

The sensitive bilateral trade deficit with China climbed to $17.9bn in January from $16.3bn, a figure that is likely to hinder administration efforts to contain mounting frustration in Congress over the rising deficit, and create a tense backdrop for the official visit of Hu Jintao, the Chinese president, next month."

Brad Setser is also all over this and with a reference to the discussion of dark matter and intangibles he states that;
Mike Mandel, Ricardo Hausmann and Federico Sturzenegger better be right (January trade data). I suppose Brad is right. We better hope that USA is exporting a lot of intangibles not tracked in the official data because if not, we cannot but begin just to worry a little bit.

The interesting things about the trade data from January are in my opinion ...

1. China's part of the trade deficit is widening.

(from the FT) 

The sensitive bilateral trade deficit with China climbed to $17.9bn in January from $16.3bn, a figure that is likely to hinder administration efforts to contain mounting frustration in Congress over the rising deficit, and create a tense backdrop for the official visit of Hu Jintao, the Chinese president, next month.

This obviously (yet again) brings forth the discussion and American claim of a further revaluation of the Yuan to offset the trade balance.

2. American exporters are actually doing quite well, but not well enough sort to speak.

(Brad Setser)

"Exports are doing fine.  January exports are up 12% y/y.   Boeing had a good month.  And corn and soybeans seem to be flowing out of the mouth of the Mississippi to world markets again.

The argument that the trade deficit is growing because the world isn't growing doesn't hold water.  Right now, strong global growth is propelling strong US export growth.  Even with a stronger dollar.

But 12% y/y export growth doesn't cut it if imports are up by about 16% y/y - and non-oil imports are up 11.2% y/y.

The real story in my book is the continued acceleration in non-oil imports."

Brad also sums it up for us ...

"There hasn't been any landing, hard or soft, to date.   The biggest import market in the world is sucking in goods and services from everyone, propelling global growth.

With massive imbalances. "

However, the crucial question remains ... how much dark matter are we omitting in our calculations and analyses?