February Trade Report: U.S. Exports Show Strong Annual Growth, Imports Surge in February
Some positive aspects of today's trade report, despite CNBC news reports on "red ink" and "losing the trade deficit war." 1. On an annual basis, U.S. export of goods and services rose in February by almost 21%, from $125 billion in February 2007 to $151.4 billion in February 2008, according to trade data released today by the BEA. This is the strongest annual growth in U.S. exports in at least 15 years (see chart above). Over the same period, U.S. imports increased by 16.45%.
2. WASHINGTON--The U.S. trade deficit took a surprising turn upward in February as imports of cars and consumer goods surged despite the weakness of the economy. The U.S. deficit in international trade of goods and services increased by 5.7% to $62.32 billion from January's revised $58.96 billion, the Commerce Department said Thursday.
Update: From a comment on this post by Ironman, "Since a slowing economy typically demands fewer imported goods, while a growing economy demands more, the increase in goods in February suggests that the recent economic downturn might be milder than the headlines would otherwise seem to indicate."
2 Comments:
Given the relative decline in value of the U.S. dollar with respect to other currencies, the increase in U.S. exports is to be expected.
What's really remarkable however is the increase in imports to the U.S. Back in the 2001, we saw the year-over-year growth rate of imports go to 0% for the duration of the recession of that year (here's a chart, from this post, showing the relative growth rates of U.S. imports and exports to China from 1986 onward that illustrates this result.)
Since a slowing economy typically demands fewer imported goods, while a growing economy demands more, the increase in goods in February suggests that the recent economic downturn might be milder than the headlines would otherwise seem to indicate.
Real imports increased 3.6% year over year and real exports increased 14.1%. See Exhibit 11. Predominately, price inflation, not goods and services, is being imported.
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