Japan accounted for $68.9 billion of the U.S. trade deficit on goods in 2016, re-emerging as the second-largest contributor for the first time in three years for a potential flashpoint when the leaders of the two nations meet Friday.
The overall U.S. trade deficit on goods shrank by 1.5% to $734.3 billion last year on a Census basis, according to Department of Commerce data released Tuesday. Exports fell 3.2% to $1.45 trillion on a strong dollar, but imports decreased 2.6% to $2.18 trillion.
The country logged a $247.8 billion surplus on services, bringing the overall U.S. trade deficit to $502.3 billion on a balance of payments basis.
The goods deficit with Japan remained roughly flat and accounted for 9% of the U.S. total. The deficit on motor vehicles and parts — an area in which President Donald Trump claims Japan engages in unfair practices — jumped to $52.6 billion from $48.9 billion in 2015, making up nearly 80% of the total American deficit with Japan.
Japanese automakers are increasing production in North America. But cars sold from Japan to the U.S. tend to be higher-end models, and the average price per unit is rising.
China was the top contributor to the U.S. trade deficit on goods, accounting for $347 billion, or 47%. Germany ranked third and Mexico fourth. Trump, seeking to curb the deficit, has accused Japan, China and Germany of manipulating their currencies. The president also demands a renegotiation of NAFTA with Mexico.
German industrial production unexpectedly fell in December, led by a contraction in manufacturing and construction.
Output, adjusted for seasonal swings and inflation, declined 3 percent from November, when it advanced a revised 0.5 percent, the Economy Ministry in Berlin said on Tuesday. The volatile indicator’s worst reading since early 2009 compares with a median estimate for a 0.3 percent increase in a Bloomberg survey. Production was down 0.7 percent from a year earlier.
German business confidence slipped in January and momentum in manufacturing and services slowed as national elections in September and risks related to Brexit and protectionist trade policies in the U.S. weigh on the outlook. Companies assessment of current economic conditions remains favorable, with factory orders surging and unemployment dropping to a record low.
Criticising India’s decision to scrap high value currency notes, noted American economist Steve H Hanke has said demonetisation is for ‘losers’ and even Prime Minister Narendra Modi does not know where the country is heading now. “#Demonetisation is for losers and has been bungled from the start.
No one, not even Modi, knows where India is heading,” Hanke, an American applied economist at the Johns Hopkins University in Baltimore, Maryland, said in a tweet.
A Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, Hanke had earlier said that “India simply does not have the infrastructure to adapt to Modi’s demonetisation…he should have known.” Prime Minister Narendra Modi on November 8 had announced demonetisation of Rs 1,000 and Rs 500 notes in a major assault on black money, fake currency and corruption.
The Economic Survey for 2016-17 had said, “demonetisation will have significant implications for GDP, reducing 2016-17 growth by 0.25 to 0.50 percentage points compared to the baseline of 7 per cent.”
If the scenes of anarchy in Berkeley last week were not enough to strike fear into the hearts of free-speech-supporting average Americans, then The Economist just turned the fearmongery amplifier to ’11’ in its latest op-ed describing the ‘insurgency in The White House’.
The bleak cadence of last month’s inauguration was still in the air when Donald Trump lobbed the first Molotov cocktail of policies and executive orders against the capital’s brilliant-white porticos. He has not stopped…
…In politics chaos normally leads to failure. With Mr Trump, chaos seems to be part of the plan. Promises that sounded like hyperbole in the campaign now amount to a deadly serious revolt aimed at shaking up Washington and the world.
To understand Mr Trump’s insurgency, start with the uses of outrage. In a divided America, where the other side is not just mistaken but malign, conflict is a political asset. The more Mr Trump used his stump speeches to offend polite opinion, the more his supporters were convinced that he really would evict the treacherous, greedy elite from their Washington salons.
His grenade-chuckers-in-chief, Stephen Bannon and Stephen Miller, have now carried that logic into government.
Americans who reject Mr Trump will, naturally, fear most for what he could do to their own country. They are right to worry, but they gain some protection from their institutions and the law. In the world at large, however, checks on Mr Trump are few. The consequences could be grave.
Without active American support and participation, the machinery of global co-operation could well fail…
If Mr Trump truly wants to put America First, his priority should be strengthening ties, not treating allies with contempt…
America’s allies must strive to preserve multilateral institutions for the day after Mr Trump, by bolstering their finances and limiting the strife within them. And they must plan for a world without American leadership.
A web of bilateralism and a jerry-rigged regionalism are palpably worse for America than the world Mr Trump inherited. It is not too late for him to conclude how much worse, to ditch his bomb-throwers and switch course. The world should hope for that outcome. But it must prepare for trouble.
Scared yet? You should be… except President Trump is seemingly enacting exactly what the American people want and voted for – which is an awkwardly democratic thorn stuck in the paw of the establishment lion, who is salivating stubbornly hoping his drool can eviscerate the painful insurgent. Three words are what they must truly come to comprehend – four more years.
Eurozone IFO Q1 business climate sentiment report 6 Feb
“Economic sentiment in the euro area continued to firm this quarter. The Ifo Economic Climate improved to 17.2 balance points in the first quarter from 8.2 balance points previously. Expectations are far more positive than last quarter. The experts surveyed also assessed their current economic situation more favourably. The economic recovery is gathering impetus.
The best economic climate currently prevails in Lithuania, Ireland, The Netherlands, Slovenia and Germany. In Austria, Finland and Spain climate balances improved markedly and turned positive; in France and Latvia improvements were also positive, but to a lesser extent. Greece, Italy and Portugal are the only euro area countries in which the economic climate remains unfavourable.”
The specter of global stagflation is looming ever larger as inflation across the world is beating analysts’ forecasts (even before the potential effect from Donald Trump’s economic policies) but economic growth expectations remain stagnant.
As Bloomberg notes, the global Citi Inflation Surprise Index, which measures price surprises relative to market expectations, is at the highest in more than five years.
The reading turned positive in December — meaning inflation data were higher than expected — for the first time since 2012.
However, in its Keynesian-Krushing way, economic growth expectations are not tracking higher – flashing red warnings signs for global stagflation.
The problem is uncomfortably familiar. Greece has a chunky payment due to its official creditors. Reports suggest that Greece has not completed much more than a third of the measures that had been agreed upon free up the next aid tranche from the 86 bln euro package.
Time is working against Greece. The elections in France and Germany do not provide a conducive backdrop for concessions, and public support for the Greek government is sliding. Given the political context, it is important that Greece’s measures are implemented ahead of the February 20 Eurogroup meeting.
If this window of opportunity is not met, the situation could deteriorate quickly. The more Prime Minister Tsipras enacts the reforms demanded by thecreditors, the less the public supports him. Many still suspect Greece is headed toward an election this year. Since in some respects, Tsipras speaks the language of populism, a change in governments would likely be in the direction of the center, such as the New Democracy.
Currently, the official creditors expect Greece to hit its fiscal targets this year. The problem is 2018. The key target is the primary surplus (budget balance before debt servicing). The primary surplus in 2016 was estimated at 2.3% (of GDP). Starting in 2018, the agreement calls for a goal of a 3.5% primary surplus. The IMF has been insisting that considerably more dramatic action by Greece is necessary if the other official creditors refuse to reduce the debt burden, which the multilateral lender says is unsustainable.