Claims of economic recovery in the second quarter continue to find evidence in hard data. The gap between U.S imports and exports of goods and services narrowed 5.5 percent to $44.4 billion in May from $47 billion in April, according to data published by U.S Bureau of Economic Analysis on Thursday. Particularly encouraging is that the gap shrunk more due to increase in an increase in exports rather than a reduction in imports, after exports touched a record high in May. This indicates that demand both domestically and internationally is strong.
Exports of goods and services rose $2 billion to an all-time high of $195.5 billion in May. The rise was driven by a robust increase in exports of petroleum and related products, which rose to $5.5 billion in May from $4.6 billion in April, a 20 percent increase on a month-to-month basis. Crisis in Iraq is pushing countries to look for alternate sources of oil and the U.S. may stand to gain from such demand. Overall exports of industrial supplies and materials were up to $42.1 billion in April from $41.9 billion in April, while imports narrowed to $55.9 billion in May from $57.6 billion in April.
The merits of reducing imports to strengthen the economy have been debated by economists, but generally such a reduction could mean two things: either demand for foreign-made goods has declined, or the U.S. has started to meet demand for those goods domestically through the implementation of cost-reducing technology and more cost-efficient methods of production.