April 2015 Balance of Trade

America’s trade balance improved in April according to the Bureau of Economic Analysis.  It was widely expecting to be better than in March because of the externalities impacting the report at the end of the first quarter.  A labor strike at West Coast ports kept imports off our shores during the first couple of months of the year, so when the standoff was over, imports flooded into our nation, hurting trade numbers.  With the dispute behind us, imports normalized in April.

For the period, the trade deficit improved to $40.9 billion from $50.6 billion (upwardly revised from $51.4 billion) in March.  Both components improved.  Imports slumped 3.3 percent to $230.8 billion.  Fewer cell phones were imported in the period and less apparel and furniture was brought in as well.  Also, U. S. firms slowed imports of foreign made capital goods.  On the other side, exports increased 1.0 percent to $189.9 billion.  Unfortunately, civilian aircraft made up a large portion of the increase, and these purchases tend to be lumpy, so the next tally might not benefit from this segment of the economy.

In broad terms, our economy is measured using four categories, and for decades the net exports component has subtracted from total GDP quarter after quarter.  Since the end of the Great Recession, our trading shortfall has been less on average than before the contraction but remains negative nonetheless.  Worries about the recently rising dollar and slower growing trading partners have been on the mind of many forecasters, but the deficit’s 12 month average has been relatively steady and in line with the post-recession mean.  If our domestic economy continues growing while the net exports remain stable, our trade relations will have a diminishingly negative impact on the GDP statistic.  (by C. Cox)