April Trade Balance

The Commerce Department released April’s trade balance report, and it continues to be anything but balanced.  For the month we exported $148.8 billion worth of goods and services while importing roughly $189.1 billion, giving us a widening deficit of $40.3 billion.  While the deficit figure is alarming, it is nothing new, but what lies beneath it that can be most disconcerting.  April’s imports fell by $800 million while exports fell $1 billion from the month of March.  In other words, although we bought fewer foreign goods, other countries reduced their consumption of our goods by even more.  The export trend is being hindered by a continued strengthening of the U.S. dollar as global demand for it as a safe haven during these times of financial turmoil makes our goods more expensive in other countries.   As our currency strengthens, goods produced outside of our borders become relatively cheaper, causing some vendors to choose them over domestically made merchandise.   Becoming less competitive is not exactly what our recovering economy needs.  Year-over-year the goods and services deficit has gone up by about $11.8 billion.  That is because our exports have grown by roughly $25 billion while our imported consumption has gone up about $36 billion.  Still, looking further into the report we can find a couple of components that provide a silver lining.  The imported consumer products fell while imported capital goods grew.  This suggests to us here at Atlas that companies are bringing in less expensive goods that will have their value enhanced by American workers.   Imported consumer goods, which have already been processed, only satiate our need to consume and do little to boost the economy’s long-term vitality.  Nonetheless, this indicator remains in the six o’clock position and will continue to do so until the global economy looks dramatically different.