Oil pushes July U.S. trade deficit higher, but exports shine

Posted Sep 11th 2008 11:45AM by Joseph Lazzaro
Filed under: International Markets, Forecasts, Industry, India, China, Brazil, Middle East, Economic Data

Your take on the July U.S. trade data may very well hinge on whether you tend to see a half-glass of orange juice as a glass half-empty or half-full.

The downside: the U.S. trade deficit increased 5.7% in July to $62.2 billion, the U.S. Commerce Department announced Thursday. Economists surveyed by Bloomberg News had expected a $58.0 billion trade deficit for July.

The upside: the non-petroleum trade deficit in goods declined 9.8% to $29.6 billion -- its lowest level in six years, the Commerce Department said.

Almost all of July's trade deficit increase was due to oil. So, does the July trade statistic constitute a modest victory, or something less?

"It means the nation's trade deficit picture is improving, just as long as we don't use any oil," economist Peter Dawson said. "Kidding aside, the non-oil component of the trade deficit continues to improve, and I'm emphasizing that dimension. The oil import component should decrease provided oil prices continue to moderate and Americans continue to cutback gasoline use, so the trend line at least through Q4 is a good one for the trade deficit."

Overall in July, imports rose 3.9% to $230.3 billion, and exports increased 3.3% to $168.1 billion. Strong performance areas for exports included airplanes, machinery, auto parts, computers and industrial materials.

Dawson said exports remain the one, positive metric in the U.S. economy -- it's one saving grace, if you will.

"I don't want to even think of where the U.S. economy would be without the export gains. Exports gains have kept U.S. GDP from plunging, given declining consumer spending, business investment and housing's slump," Dawson said. "Our products are competitive and the weak dollar has made them a better value for foreign buyers, so look for exports to continue to register impressive results through the next quarter. Beyond that, it will depend on the health of the global economy."

Economic Analysis: As economist Dawson noted, the export story remains a bright spot for the U.S., but that could change if the global economy continues to slow. Hence, with Europe's economy already in slowdown mode, key data up ahead will include GDP performance from emerging market giants China, India, and Brazil, as well as the Middle East -- the destination for many U.S. exports.

Tags: British pound, BritishPound, dollar, euro, Europe, European Union, exports, gpd, imports, inthenews, oil prices, oil shock, trade, trade deficit, U.S. Commerce Department, U.S. economy

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Reader Comments (Page 1 of 1)

9-12-2008 @ 5:28PM

arthur lee davis said...

would someone suggest to C------S. " D--- the text messages? Skyrocketing food,fuel, medications (even for veterans),and everything else remotely used by Americans that requires it to be delivered is on an increase that is unparalleled. Some of us need immediate relief from suddenly being overwhlemed by those huge gasoline increases. The downward spiral is not as rapid as the upward one. You do catch it. Right.