May Balance of Trade

America’s trading shortfall improved slightly in May according to data from the Bureau of Economic Analysis.  The chasm closed to $44.4 billion from $47.0 billion (revised from $47.2 billion) in April.  The improvement came as exports increased 1.0 percent and imports dipped 0.3 percent in the period.

Much of the advance in exports can be attributed to petroleum goods.  Fueled by a 21.1 percent increase in sales to foreign buyers, the petroleum goods trade gap fell $300 million to $18.6 billion.  Unfortunately for many other exporters, including natural gas purveyors, the month-over-month change was negative for the period.  However, there must be some pressure building in the world of jewelry because exports of gem diamonds were a particularly strong, growing by 22.1 percent in the period, the strongest monthly change within the goods portion of the data.

Four out of the six major categories fell on the import portion of the report.  Foreign food purchases fell 1.8 percent.  Industrial supplies dropped 3.0 percent for the month.  Fewer consumer goods were bought, falling 1.0 percent.  “Other goods,” by itself a rather small category, collapsed 10.0 percent;.  Businesses managed to increase their capital consumption, and automotive related sales increased 5.0 percent during the month also.

Mixed feelings accompany this report.  A falling trade balance seems like a good idea, but if it comes at the expense of American consumption, it may indicate the largest contributor to our economy is fatiguing.  Many indicators Atlas follows (e.g. retail sales) are showing signs that American consumers are getting lethargic, and the balance of trade report supports this point of view.  Increased consumption of American goods and services by foreign buyers is heartening, especially when so many headlines refer to slower economic growth and political turmoil in various regions of the world, but we should not lose sight of the fact that this weak global economic recovery is also getting long in the tooth, thus making it even more susceptible to exogenous shocks like airliners in the Ukraine or missiles in Gaza.        (by C. Cox)