What We Learned About the Economy This Week

The 10-second takeaway for the week is that the bottle of wine you’re saving for when the economy finally, unequivocally rounds a corner is safe collecting dust for now (just make sure it stays horizontal).

Perhaps the most interesting economic development last week was revealed in the U.S. International Trade in Goods and Services report. The U.S. trade balance, running a deficit as usual, unexpectedly shrank to -$38.5 billion in December. Of course, that’s still a massive number, but compared to November’s -$48.6 billion deficit and estimates for -$46.0 billion in December, it’s relatively slim.

There are a number of details that make this particularly attractive. The first is that U.S. service exports are not just running a surplus, but that surplus is increasing — $0.7 billion in December to $17.7 billion total. Meanwhile, the goods deficit decreased by $9.4 billion to $56.2 billion, led by an increase in industrial goods and civilian aircraft exports. Not only does this suggest strength among America’s exporters, but increased demand from overseas economies suggests that the global economy is getting healthier.

What all this points to, and what most people care about, is that the unexpectedly strong trade data could result in an upward revision to the advance estimate of fourth-quarter economic growth, which showed an unexpected 0.1 percent contraction.