Will Trade Help or Hurt the Second-Quarter Economy as Deficit Widens?
The U.S. Bureau of Economic Analysis reported on Tuesday that the trade deficit increased from $37.1 billion in March to $40.3 billion in April. The increase was $0.9 billion less than forecast by economists, and primarily reflects an increase in imports for non-petroleum products.
Total April exports increased $2.2 billion $187.4 billion, while total imports increased $5.4 billion $227.7 billion. The trade deficit is broken down into to broad components: goods and services.
Historically, the U.S. has run a large goods deficit and a smaller services surplus. In April, the U.S. exports of goods increased $1.8 billion to $131.1 billion, while imports increased $5.0 billion to $189.7 billion, creating a goods deficit of $58.6 billion, $3.2 billion higher than March.
Within the goods component, non-petroleum goods imports increased $4.1 billion to $37.8 billion, or about 65 percent of all goods imported. On the other side of the equation, the petroleum goods deficit shrank $0.8 billion to $19.7 billion, or about 34 percent of all goods imported.
In April, U.S. exports of services increased $0.4 billion to $56.3 billion, while imports increased $0.3 billion to $38.0 billion, creating a total services surplus of $18.3 billion, $0.1 billion higher than in March.
The U.S. trade deficit with China increased from $17.9 billion in March to $24.1 billion in April. The expansion in the deficit with China is not necessarily concerning for two reasons: first, the deficit contracted in March to a recent low. Many observers credited the contraction with a seasonal drop in exports due to the New Year holiday. Secondly, increased exports from China suggest that the nation’s economy is turning on all gears. Higher exports should also lead to higher demand, which should be good for international business.
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