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The U.S. trade deficit in goods and services hit a three-year low in August, falling to a seasonally adjusted $58.3 billion, from $64.7 billion in July. The trade deficit is a measure of the difference between what the United States buys from foreign nations and what it sells overseas. August’s data indicate that trade continues its path toward its pre-COVID normal. Year-to-date, the trade deficit is down 20.7% from the same period in 2022.
Exports growth is still robust, but the outlook remains bleak. The 1.6% increase in total exports was primarily because of a substantial jump in exports of crude oil, as well as solid gains in consumer goods, capital goods and travel-services exports. Outbound shipments of automobiles and parts were down sharply. The reopening of the global economy was good for exports in 2021 and 2022, but it has been less of a driver so far this year, as growth has downshifted across the world. With most of the country’s major trading partners struggling to generate much economic growth, the outlook for exports remains weak, particularly as the dollar has recently started to strengthen again.
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A decrease in inbound shipments of consumer goods led to a 0.7% fall in total imports. Every major goods category saw imports fall in August except for industrial supplies and materials. Imports have largely been decreasing since peaking early last year, as shifts in consumer spending translate into lower demand for foreign-made products.
The surplus in services trade rose to the third-highest monthly level on record, reaching $26.2 billion in August. Historically, the United States imports more goods than it exports but runs a surplus in services. Exports of services rose on higher demand for travel and transportation from visitors to the country. Imports of services fell, due largely to the reverse effect of slower demand for overseas travel and transport by Americans.
Trade’s net contribution to GDP growth in the third quarter of the year will be modest, based on the latest data.
Source: Department of Commerce, Trade Data
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