Strong Export Growth Reduces Recession Odds

WSJ/WASHINGTON -- The U.S. trade deficit widened in January as the price for oil set a new record, but the shortfall was smaller than expected, with exports making their largest climb in six months. U.S. exports in January climbed 1.6% to $148.23 billion from $145.86 billion, spurred by a weak dollar and solid growth of major trading partners. Imports also increased, despite the U.S. economy's sharp slowdown. Purchases of foreign goods and services rose by 1.3% to $206.43 billion from $203.72 billion.

The graph above (click to enlarge) shows monthly U.S. exports of goods and services, on a year-to-year percentage change basis, from 1993-2008. The 16.56% growth in U.S. exports from January 2007-Janauary 2008 was the highest annual increase in more than 3-and-a-half years(since May 2004, see horizontal line in graph), was the fifth highest increase since 1993, and followed a general trend over the last year of increasing exports.

Notice also the significant decline in the exports during the 2001 recession - much different than today's robust and healthy export sector. As First Trust Advisors report, "Today’s trade data greatly reduce the odds the U.S. economy is in recession."