The U.S. trade deficit widened. It’s time to recalculate the impact of gold
The U.S. trade deficit in goods and services for August, released tonight, came in at $105.6 billion, compared with a revised $92.8 billion in July. Imports grew faster than exports, making it easy to jump to the conclusion that U.S. growth is being dragged down again.
But in its October 6 release, the BEA specifically cautioned that nonmonetary gold should be treated separately. When trade data are incorporated into GDP calculations, gold imports and exports are replaced with an adjustment reflecting the difference between domestic gold production and industrial use.
That’s because cross-border bullion transactions and the amount of new goods produced domestically in the U.S. are not the same thing. A shift in financial asset allocation can’t be translated dollar for dollar from customs data into an increase or decrease in domestic output.
Also, this monthly deficit is seasonally adjusted but not adjusted for price changes. Real GDP calculations use different measures, including prices and quarterly totals. Using a single month’s dollar difference to guess the impact on growth in percentage points can easily lead you astray twice over.
I’ll first break down the composition of goods and the gold adjustment, then look at whether the growth outlook has materially changed. When trading BTC, ETH, or SOL, macro data affect the market through interest rates and risk appetite; the headline itself doesn’t provide a buy or sell signal.
The second image is a stock photo of bullion, not a record of this month’s physical imports and exports.
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The U.S. trade deficit in goods and services for August, released tonight, came in at $105.6 billion, compared with a revised $92.8 billion in July. Imports grew faster than exports, making it easy to jump to the conclusion that U.S. growth is being dragged down again.
But in its October 6 release, the BEA specifically cautioned that nonmonetary gold should be treated separately. When trade data are incorporated into GDP calculations, gold imports and exports are replaced with an adjustment reflecting the difference between domestic gold production and industrial use.
That’s because cross-border bullion transactions and the amount of new goods produced domestically in the U.S. are not the same thing. A shift in financial asset allocation can’t be translated dollar for dollar from customs data into an increase or decrease in domestic output.
Also, this monthly deficit is seasonally adjusted but not adjusted for price changes. Real GDP calculations use different measures, including prices and quarterly totals. Using a single month’s dollar difference to guess the impact on growth in percentage points can easily lead you astray twice over.
I’ll first break down the composition of goods and the gold adjustment, then look at whether the growth outlook has materially changed. When trading BTC, ETH, or SOL, macro data affect the market through interest rates and risk appetite; the headline itself doesn’t provide a buy or sell signal.
The second image is a stock photo of bullion, not a record of this month’s physical imports and exports.
$BTC $ETH $SOL
Tap my profile picture to view my live trading account