U.S. International Trade (Exports + Imports) Reaches 22-Month High of $354 Billion in Aug.

Today the BEA released its closely-watched report on “U.S. International Trade in Goods and Services."  In August there was $153.9 billion of international selling activity (U.S. firms selling their output to other countries, or exports) and $200.2 billion of international buying activity (U.S. firms and consumers purchasing products from other countries, or imports). Then what the BEA does (and this is what gets reported widely by the media) is to subtract imports from exports, to arrive at the monthly “trade deficit,” which was -$46.3 billion in August, up from $42.6 billion July.  As usually happens, any increase in the U.S. trade deficit will get reported as a negative event, here's an example today from CNNMoney:

"The U.S. trade deficit ballooned to $46.3 billion in August, according to a government report released Thursday.The trade balance -- which measures the difference between the nation's imports over exports -- came in higher than estimates. The trade gap widened from $42.6 billion in July. An imbalance between exports and imports can drag down economic growth in the U.S and also lead to more job losses in the manufacturing sector."

It's probably a good thing that the government doesn't also report detailed trade statistics among U.S. states, because there would likely be dozens of state "trade gaps" each month between individual states, and I guess that would "drag economic growth in the U.S." just like our "trade gaps" with China or Canada supposedly "drag economic growth in the U.S.?"

As I reported back in August: Given the importance of all international transactions to the U.S. economy, why not consider a measure of international trade that would compute the total amount of international trading activity in a given month by ADDING exports to imports (see the chart above for total monthly trade), instead of netting out these two amounts to calculate the “trade deficit”?

Here’s how the August trade statistics might get reported:

Total U.S. trade with the rest of the world (sales of U.S. products to consumers and firms in other countries PLUS purchases of foreign production by American consumers and businesses) reached a 22-month high of $354.1 billion in August, the highest level since October 2008, and 44% above the April 2009 cyclical low of $246 billion (see chart above).

Further, the combined amount of trade activity for Americans buying and selling goods and services in the global marketplace has increased in 12 out of the last 15 months (following ten consecutive declines), providing further evidence that the economy started on a recovery path last summer and continues to make solid gains almost every month.  Both the sales of U.S. goods and services produced by American firms and sold to the rest of the world, and the purchases of foreign-produced goods and services by American consumers and firms, have been on an upward trend since the summer of 2009 as the U.S. and global economies recover.