Tom Moeller

large_20221021A3.jpg

medium_20221021A3.jpg

small_20221021A3.jpg

thumbnail_20221021A3.jpg

20221021A3.jpg

large_20221021B3.jpg

medium_20221021B3.jpg

small_20221021B3.jpg

thumbnail_20221021B3.jpg

20221021B3.jpg

The U.S. Treasury Department reported a federal budget deficit of $1.375 trillion during fiscal year 2022 compared to a $2.776 trillion deficit one year earlier. For September alone, the deficit totaled $429.7 billion. The Action Economics Forecast Survey expected a $24.6 billion deficit for September.

Overall revenues improved 21.0% y/y in FY'22. Individual income tax receipts increased 28.8% y/y as employment continued to rise. Corporate tax payments rose 14.3% y/y with strength in business earnings. Social insurance taxes rose 12.9% y/y in FY'22 and excise taxes grew 16.5% y/y.

Federal government outlays declined 8.1% y/y in FY'22. Income security payments nearly halved this year in the absence of economic stimulus checks. National defense outlays grew 1.6% y/y in FY'22. Outlays on health programs rose 14.8% y/y in FY'22. Social Security outlays increased 7.4% y/y last fiscal year and Medicare outlays rose 8.4%. Interest payments surged 34.9% y/y.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.

large_20221021C3.jpg

medium_20221021C3.jpg

small_20221021C3.jpg

thumbnail_20221021C3.jpg

20221021C3.jpg

large_20221021D3.jpg

medium_20221021D3.jpg

small_20221021D3.jpg

thumbnail_20221021D3.jpg

20221021D3.jpg

- Revenues continue to rise despite economy's slowing.
- Spending declines absent stimulus checks.

U.S. Government Budget Deficit Narrows in Fiscal Year 2022

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Tian Yong Woon

This week, we explore potential opportunities in Asia if the US ultimately follows through with imposing tariffs on Canadian crude oil exports.

We begin by acknowledging the US-Canada energy relationship, where Canada has become a dominant supplier of crude oil to the US over the years (chart 1). If a 10% tariff were imposed on Canadian crude, it could result in significant economic disruption for both nations. This reliance on Canadian crude highlights critical aspects of the US energy sector. Although the US is a net exporter of refined oil, it remains heavily dependent on Canada’s heavy, sour crude, particularly for refineries in the Midwest (chart 2). Additionally, fully and immediately replacing this crucial supply is challenging for US refiners, as alternatives like Venezuelan crude are politically unfeasible and currently lack the necessary scale (chart 3).

However, what may seem disruptive to some presents a window of opportunity to others. With the recently operational Trans Mountain (TMX) pipeline, Canada has improved its access to Asian markets, and China has already begun absorbing a growing share of Canada’s crude oil output (chart 4). The competitive pricing of Canadian crude further enhances its appeal to China’s manufacturers and refiners (chart 5). While it may still be early for Canada to become a major supplier to China—given that countries from the Middle East, Russia, and Africa dominate the market—this shift signals potential for growth (chart 6).

Nonetheless, the scope and intensity of US trade actions continue to evolve. Recently-announced policy measures include a 25% tariff on all steel and aluminium imports into the US, and observers are now awaiting "reciprocal" tariffs, as promised by US President Trump, set to be revealed later this week.

**The US-Canada energy relationship**
On February 1 this year, the United States initially announced a 10% tariff on energy imports from Canada, along with a 25% tariff on all other imports, as part of an effort to pressure Canada into addressing US concerns about illegal immigration and the flow of drugs across their shared border. In response, Canada initially announced retaliatory tariffs. However, the situation was temporarily de-escalated after a conversation between US President Trump and Canadian Prime Minister Trudeau. As part of the discussions, Trudeau agreed to ramp up security along the US-Canada border, leading to a one-month delay in the implementation of the tariffs.

This exchange between the two countries sparked widespread debate on the potential consequences of such tariffs, should they be enforced in the future. One key aspect that emerged from the discussions was the critical energy relationship between the US and Canada. Specifically, Canada’s crude oil exports to the US have become increasingly dominant over the years, as illustrated in chart 1. This growing trend underscores Canada's importance as a key supplier of crude oil to the US, highlighting the potential economic ramifications of any trade barriers between the two nations.

250210T1.jpg

The incident also raised numerous questions among investors and observers, particularly regarding the extent of the US’s reliance on Canadian crude oil and whether the US could truly wean itself off this supply in the event of a 10% tariff. While one might argue that the US could simply immediately source crude from other countries or rely on its domestic production, such reasoning oversimplifies the situation and overlooks real-world complexities. Moreover, this argument falsely assumes that all crude oils are interchangeable, with no significant consequences for US refineries if one type of crude is replaced by another.

The reality is that, despite being a net exporter of refined oil, much of the input for US refineries still comes from Canada, particularly those in the Midwest (as shown in chart 2). This dependence on Canadian crude remains a critical factor. Furthermore, many US refineries are specifically optimized to process heavy, high-sulphur crude oils like Western Canadian Select (WCS), and are ill-suited to handle lighter crude oils, such as the shale (tight) oil produced in the US. As a result, the US often exports much of its shale oil in its crude form, sending it abroad for further refining, while relying greatly on heavier Canadian crude for its domestic refining needs.

250210T2.jpg

As such, while imports from Canada are likely to decrease if the US imposes a tariff on Canadian crude, it is unlikely that US refiners will be able—or willing—to stop all Canadian crude imports immediately. As previously mentioned, US refineries remain highly dependent on Canada for its heavy crude feedstocks. Therefore, refiners will likely continue to rely on Canadian oil to some extent, albeit with potential damage to profit margins and/or higher prices passed on to consumers.

At the same time, the tariff—or even the mere prospect of it—could have already prompted a shift towards a further development of refining capabilities for lighter crude oils. However, this would require substantial capital investment and time. Moreover, the US may also face pressure to secure heavy crude oil from alternative sources. While this could involve efforts to find substitutes, fully replacing Canadian crude is extremely challenging. For instance, alternatives such as Venezuelan oil are politically unfeasible due to sanctions and lack the necessary scale, as shown in chart 3.

250210T3.jpg

**Opportunities in Asia**
On Canada’s side, the country will likely need to redirect some of its crude supply elsewhere if a 10% US tariff is eventually imposed. With reduced demand from the US likely putting downward pressure on Canadian crude, this could open up opportunities for Asian refiners. It is perhaps fortunate that Canada’s access to Asian markets has improved, thanks to significantly shorter voyage times, among other factors, since the Trans Mountain (TMX) pipeline became operational in May 2024. Even before the US officially announced tariffs on Canadian crude, China had already begun absorbing a significant portion of the oil. The opening of the TMX pipeline has also improved Canada’s access to other Asian refiners, such as those in Japan and South Korea. However, exports of Canadian crude to these countries have not seen a marked increase since May 2024, in contrast to the rise in shipments to China, as shown in chart 4. 

250210T4.jpg

Digging deeper, China’s growing absorption of Canadian crude likely stems from both accessibility and economics. In terms of accessibility, the shorter shipping routes enabled by the opening of Canada’s TMX pipeline are a key factor. Moreover, the absence of sanctions on Canadian crude allows for free and direct purchases at scale. From an economic standpoint, Canadian crude is competitively priced, even when compared to heavy crudes from sanctioned countries like Venezuela and Iran, as shown in chart 5. The blend of competitive pricing and improved accessibility makes Canadian heavy crude an attractive option for China’s manufacturers and producers.

250210T5.jpg

Much like how US export controls and restrictions on China’s access to semiconductors have driven China’s push for semiconductor self-sufficiency, the potential for US tariffs on Canadian crude may have already prompted a shift in Canada’s approach. The Canadian government may now be exploring ways to diversify its crude export destinations and reduce its reliance on the US market. China presents a viable and potentially major alternative, assuming no further trade complications arise between the US, Canada, and China. That being said, there are early signs of shifts following the completion of the TMX pipeline and recent US-Canada tensions. However, Canada remains a very small supplier of crude oil to China, as shown in chart 6. Other suppliers, such as Russia, and countries in Africa and the Middle East, continue to dominate China's crude oil imports.

250210T6.jpg

Asia

Economic Letter from Asia: Talking Oil

250207A4.jpg

250207B4.jpg

Nonfarm payrolls increased 143,000 (1.3% y/y) in January after rising 307,000 in December, revised from 256,000, and 261,000 in November, revised from 212,000. Expectations had been for a 165,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 237,000 in January, up from 204,000 in December and the highest since March 2023.

Average hourly earnings increased 0.5% last month (4.1% y/y) following a 0.3% December rise and a 0.4% November gain. Earnings growth of 4.1% y/y remained up from 3.6% in July, but below the 5.9% high in March 2022. A 0.3% January increase had been expected.

The unemployment rate, measured in the household survey, eased to 4.0% in January from 4.1% in December. The Action Economics Forecast Survey expected 4.1%. It reached a low of 3.4% in April of 2023. Household employment rose 234,000 in January, when adjusted for population control effects. The population-adjusted labor force rose 91,000.

In the **payroll survey**, private-sector employment rose 111,000 in January (1.3% y/y) following a 223,000 December gain. Construction sector employment increased 4,000 (2.3% y/y) last month after rising 13,000 in December. Factory sector payrolls gained 3,000 (-0.7% y/y) after falling 12,000 in December.

Private service-producing employment increased 111,000 (1.5% y/y) last month after increasing 275,000 in December. Increases varied greatly amongst service sector categories. Private education & health service jobs rose 61,000 (3.8% y/y) while trade, transportation & utilities employment rose 38,000 (0.9% y/y). Financial activities jobs rose 7,000 (0.7% y/y) and information sector employment rose 2,000 last month (-0.4% y/y). Leisure & hospitality employment fell 3,000 (+1.8% y/y) while professional & business service jobs declined 11,000 (-0.2% y/y).

Government sector payrolls increased 32,000 in January (1.9% y/y) after rising 34,000 in December. Local government jobs improved 21,000 last month (1.8% y/y) while state government employment rose 2,000 (2.4% y/y). The number of federal government jobs rose 9,000 (1.5% y/y).

The 0.5% January rise in private-sector average hourly earnings reflected a 0.3% gain (4.0% y/y) in the goods-producing sector. Earnings in construction improved 0.3% last month (4.1% y/y) as did factory sector earnings (3.9% y/y). In the services sector, earnings rose 0.5% 4.1% y/y after rising 0.3% in December. Information sector earnings strengthened 1.2% (5.2% y/y) and professional & business service-sector earnings rose 0.3% (5.1% y/y). Trade, transportation and utilities pay jumped 0.5% (2.7% y/y). Leisure & hospitality earnings rose 0.4% (3.7% y/y). Financial sector earnings increased 0.9% (4.5% y/y) while private education & health services earnings increased 0.4% (4.4% y/y).

250207C4.jpg

250207D4.jpg

The length of the average workweek in the private sector fell sharply to 34.1 hours last month from 34.2 hours in December. The workweek in the goods-producing sector eased to 39.6 hours, compared to 39.7 hours in the previous two months. The construction sector average workweek slipped to 38.7 hours from 38.8 hours. The factory sector workweek slipped to 40.0 hours from 40.1 hours while average weekly overtime hours edged up to 2.8. The average workweek in the private service sector fell to 33.0 hours from 33.2 hours. The aggregate weekly hours index in the private sector, a key indicator of production and income, fell 02% last month (+0.9% y/y) after a 0.1% December easing.

In the **household survey**, the decline in the jobless rate to 4.0% from 4.1% occurred as the rate for teenagers rose to 11.6%, while for individuals aged 20-24 the rate eased to 6.6%. The jobless rate for workers aged 25-54 slipped to 3.4% but for workers 55 and over, it was little changed at 3.1%.

The employment/population ratio for all workers rose to 60.1% in January. It remained below its high of 61.1% in February 2020, just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250207X4.jpg

250207F4.jpg

- Job gain is less than half of December’s rise.
- Earnings growth improves.
- Jobless rate edges down to early-2024 low.

U.S. Payroll Employment Gain Slows but Jobless Rate Eases in January

250207RS.jpg

250207SS.jpg

Consumer credit outstanding ballooned $40.8 billion during December after falling $5.4 billion in November, revised from a $7.5 billion drop. October’s rise was little changed at $17.4 billion. A $12.3 billion rise had been expected in the Action Economics Forecast Survey. During all of last year, consumer credit rose 2.4% y/y following a 2.6% rise in 2023.  As a percentage of disposable personal income, consumer credit was 23.3% in December, down from 23.9% in December 2023.

In December, revolving credit, which includes credit cards, surged $22.9 billion (4.8% y/y), following a $13.8 billion November decline. Revolving credit outstanding held by depository institutions rose 5.2% y/y. Revolving credit held by finance companies fell 12.2% y/y while that held by credit unions rose 4.4% y/y.

Nonrevolving credit outstanding rose $18.0 billion (1.6% y/y) in December after an $8.5 billion in November rise. Nonrevolving credit held by depository institutions eased 0.2% y/y in December. Finance company debt holdings rose 2.6% y/y. Credit union holdings eased 2.3% y/y in December.

Student loans totaled $1.8 trillion in Q4, up by 2.8% y/y. Motor vehicle loans grew 0.9% y/y to $1.6 trillion.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

250207TS.jpg

250207US.jpg

- Revolving credit posts record rise.
- Nonrevolving credit strengthens.

U.S. Consumer Credit Surges in December

Andrew Cates

**Global current account imbalances**
Several US economic commentators have argued that US trade imbalances are fundamentally driven by capital account dynamics rather than trade policies or unfair competition. In other words, the US runs a persistent current account deficit not because of trade flows, but because of an excess capital account surplus—meaning that the US absorbs foreign savings surpluses from economies such as China, Germany, and Japan. These countries save more than they invest domestically, and their surplus savings are recycled into US financial markets due their deep and flexible capital markets, and superior return prospects. This explains why fluctuations in Germany’s, Japan’s, and China’s current account surpluses in recent years have been mirrored by corresponding shifts in the US current account deficit (chart 1).

250206Z1.jpg

**The US dollar**
As noted, this continuous inflow of foreign capital has pushed up the value of the dollar (chart 2), making US exports less competitive while encouraging domestic consumption and imports, reinforcing the trade deficit. That means that policies aimed at reducing US trade deficits via tariffs could be ineffective because they fail to address these underlying global savings and investment imbalances.

250206Z2.jpg

**Potential growth rates**
As further noted, another key factor behind the global imbalances concerns the US economy’s superior growth prospects compared with elsewhere. As Chart 3 illustrates, the US has maintained slightly higher potential GDP growth over the past 10–15 years, in stark contrast to the declining potential growth rates in Germany and China (albeit from much higher levels). Meanwhile, Japan’s potential growth has remained relatively stable but at already subdued levels.

250206Z3.jpg

**Reserve currencies**
Another key driver of the dollar – and the US current account deficit – is arguably the continued dominance of the US dollar in central banks’ reserves. Chart 4 below illustrates the global share of allocated foreign exchange reserves across major currencies over time. It shows that the US dollar has maintained a dominant share of these reserves, consistently accounting for over 55-60% of the total. This means that policies aimed at reducing the allure of the US dollar – and its financial markets – may find more success in reducing US trade imbalances compared with bilateral tariff policies.

250206Z4.jpg

**Savings, investment and demographics**
Policies aimed at reducing savings surpluses in overseas economies could also be more effective than bilateral tariffs in addressing trade imbalances, but they are difficult to implement. Chart 5 highlights a (small) negative correlation between current account balances and dependency ratios, indicating that economies with higher dependency ratios (i.e., more children and elderly relative to the workforce) tend to have lower current account balances. This occurs because higher dependency ratios reduce national savings, as dependent populations consume more while contributing less to production and savings, leading to current account deficits. The US deficit appears broadly in line with other major economies, given its demographic structure and investment needs. However, Germany and Japan stand out as big outliers, running very large savings surpluses despite ageing populations. This is a function of several factors including their strong industrial base and a cultural aversion to debt accumulation, partly shaped by historical legacies. Policies that trigger a reduced aversion to debt and encourage greater domestic consumption and investment could help rebalance global savings and trade flows. In Germany, this could involve higher public spending, stronger wage growth, and tax incentives to boost household consumption, while in Japan, reforms to pension systems and labour markets could incentivize higher domestic investment.

250206Z5.jpg

**Global trade and supply chain pressures**
Predicting how these developments will unfold and their broader impact on the global economy remains highly uncertain. The latest daily data from the Baltic Dry Index indicates that global shipping costs have fallen sharply in recent weeks, likely due to weaker demand for bulk shipping and container freight. Additionally, uncertainty surrounding trade policy may have led businesses to delay investment in global supply chains, further dampening shipping demand. However, in the longer term, higher tariffs could introduce new supply chain pressures. If tariffs provoke retaliatory trade measures from China or other key partners, logistics networks could come under renewed strain, leading to heightened supply chain volatility. This could, in turn, drive up costs, disrupt trade flows, and re-ignite global inflation risks, and add further complexity to an already fragile global economy.

250206Z6.jpg

President Trump’s tariff policies have been a major driver of financial market volatility in recent days, sparking sharp swings in equities and currencies. While the administration has temporarily reversed its proposal for a 25% tariff on imported goods from Canada and Mexico, uncertainty surrounding US trade relationships, the risk of retaliatory measures from key trading partners, and broader concerns about global growth continue to unsettle investors. A fundamental irony is that the US trade deficit—the very issue that President Trump purportedly aims to correct—is not primarily driven by so-called “unfair” trade practices but rather by global savings and investment imbalances (chart 1). Nations such as China, Germany, and Japan have maintained high savings rates for several years, and their excess capital is continually recycled into US financial markets, where superior returns and deep liquidity have made the US an attractive investment destination. The persistent inflow of foreign capital strengthens the US dollar, reinforcing the trade deficit rather than narrowing it (charts 3 and 4). Indeed, the multi-year highs in the trade-weighted value of the dollar serve as clear evidence that capital has continued to flow into the US, sustaining deficits despite protectionist measures. Ultimately, Trump’s tariff-driven policies risk doing more harm than good, as they threaten to slow global growth, strain relationships with allies, and exacerbate inflationary pressures by raising input costs for US businesses and consumers. Rather than addressing the root causes of global imbalances (chart 5), such measures distort supply chains (chart 6), impair productivity growth, and fail to alter the fundamental drivers of trade deficits.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/1p2NkDBZtnavX2QGE0ERXn?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

U.S. Government Budget Deficit Narrows in Fiscal Year 2022

Summary

Tom Moeller

More Economy in Brief

Economic Letter from Asia: Talking Oil

U.S. Payroll Employment Gain Slows but Jobless Rate Eases in January

U.S. Consumer Credit Surges in December

Charts of the Week: Tariff Trouble