In December, the US trade deficit widened from a downwardly revised $47.1 billion to $48.8 billion, broadly in line with expectations. The trade deficit is again at the highest level in six months. The details show that imports rose by 1.3% M/M to the highest level since July 2008, while exports rose by a softer 0.7% M/M despite record sales of petroleum to overseas buyers. Excluding petroleum, the trade deficit widened from $19.4 billion to $21.9 billion. It is however difficult to assess which impact the data will have on fourth quarter GDP, as the monthly data were revised back to the beginning of 2011.
According to the preliminary estimate, University of Michigan consumer confidence weakened in February for the first time in six months. The headline index dropped from 75.0 to 72.5, while only a marginal decline was expected (to74.8). The deterioration in sentiment was led by the economic conditions sub-index, which dropped from 84.2 to 79.6. The economic outlook sub-index weakened only slightly, from 69.1 to 68.0. Inflation expectations show a mixed picture as 1-year ahead expectations dropped from 3.3% to 3.2%, while 5-year ahead inflation forecasts rose from 2.7% to 2.9%. After the sharp improvement over the previous months, it is no surprise to see a slight worsening in consumer mood, probably due to higher gasoline prices. We hope however that the index will resume its upward trend in the coming months as consumer confidence is still well below the LT average.