Posts Tagged ‘Trade Deficit’

One Month’s Not a Trend, But January’s Trade Data Could Point To A Slowdown in Global Trade

March 11th, 2010 Michael McDonough Comments off

Trade, the life blood of the global economy, has begun rebounding nicely since the trough of the global economic crisis.  But, January’s US trade data unexpectedly displayed a decline in both exports–the first decline in nine months–and imports, leading to a smaller US trade deficit, but also implying a potential slowdown in global trade.  As I said, one month does not indicate the start of a trend, but this is something that should be monitored moving forward.  The chart below illustrates the relationship between the U.S. trade deficit and the Baltic Exchange’s Baltic Dry Index (BDI).  As you can see the sharp decline in the US trade deficit during the economic crisis–indicative of a slowdown in global trade–coincided with a collapse in shipping rates as measured by the BDI.

US Trade Deficit (White Line) vs. the BDI (orange Line):


Trade Data: Good News for Recovery, But Wider Than Anticipated Deficit Likely Means Downward Revision to Q3 Growth

November 13th, 2009 Michael McDonough Comments off

September’s trade deficit widened more than anticipated to -US$36.5B from a revised -US$30.8bn in August (originally -US$30.7bn).  Exports rose by +2.9% to US$132.0B, while imports were up a more significant +5.8% to US$168.4B–with auto imports rising a substantial US$1.4bn.  It is not at all unusual for the trade deficit to widen during the early stages of an economic recovery.  But, the wider than anticipated trade gap could place some downward pressure on third quarter GDP growth, which according to the advance release was estimated at 3.5%.  The data presently available would indicate a growth rate of closer to 3.0%.  At the same time, stronger US exports should help bolster the domestic manufacturing sector.