The U.S. economy has run a trade deficit every year since 1976. While not all of the data for 2010 has been released, it is safe to say the record has not been broken. The Commerce Department’s report on international trade in goods and services notched another month of deficits in November. The good news is the difference in trade improved over October’s release. By dropping a mere $100 million, November’s $38.3 billion deficit has replaced October place as having the second lowest monthly trade deficit in 2010.
The reduction in the trade deficit was aided as exports grew faster than imports. For the month, exports improved by $1.2 billion while imports expanded by $1.1 billion. Overall, however, things aren’t all that rosy; exports have grown $20.7 billion year-over-year versus imports which are up $23.7.
The take away from the report is that both imports and exports grew. This illustrates demand has picked up both in the U.S. and foreign countries. The fact that the trade deficit declined as we imported more suggests the rest of the world’s demand for our goods is growing faster than our demand for the goods and services others provide. As we wrote in the last trade balance posting, October’s report benefited from a weaker dollar versus a basket of currencies. November did not get the same currency tailwind as the dollar leveled out and ended the month stronger than it started, so the strength of this report is more likely caused by an actual global recovery instead of just dollar weakness.