Today’s revised second quarter gross domestic product (GDP) figures show that inflation-adjusted U.S. exports hit a new quarterly record of $2.0807 trillion (annualized) – but that real imports stayed at a record level, too ($2.5411 trillion annualized). Although overall economic growth picked up dramatically from April through June, trade’s drag on the still-subpar U.S. recovery remains considerable, with nearly all the damage inflicted in the private sector. Meanwhile, President Obama’s export doubling goal looks like more of a flop than ever. Here are the highlights:
>The new record trade figure represents a slight upward adjustment from the $2.0762 trillion figure of last month’s second estimate, and pegs quarterly real export growth at 11.1 percent annualized, rather than the 10.1 percent of the previous estimate.
>The new data also reveal that inflation-adjusted U.S. imports increased slightly from levels reported last month for the second quarter. Real imports rose by 11.3 percent in the second quarter at an annualized rate, not the 11 percent estimated previously.
>As a result, the quarterly U.S. inflation-adjusted trade deficit was revised down from the annualized $463.5 billion estimated in last month’s GDP release to $460.4 billion. This level still represents an increase from the $447.2 billion annualized real trade shortfall for the first quarter.
>The new real trade deficit means that the trade shortfall’s drag on second quarter growth fell from 0.43 percentage points to 0.34 percentage points. The trade drag in the weather-affected first quarter was 1.66 percentage points – the largest ever for a non-recessionary quarter.
>Yet the trade deficit’s widening from $366.3 billion in the second quarter of 2009 means that worsening trade flows have reduced the American economy’s cumulative growth during the current economic recovery by 5.69 percent. Nearly all this damage, moreover, has come in the private sector.
>Greater still has been the growth-killing impact of U.S. trade flows affected heavily by trade agreements and other American trade policy decisions, since these new quarterly figures in the GDP report also include a dramatically shrinking trade shortfall in energy products.
>A more complete analysis of the impact of trade policy on economic growth will be possible next week, when the August monthly trade figures are released. The prior July figures, however, revealed that the policy-driven trade deficit dipped from its June level of $46.87 billion to $46.67 billion – not far below May’s all-time record of $49.04 billion.
>The new GDP figures also make clearer than ever the hubris of President Obama’s export-doubling goal. Mr. Obama believed that his efforts could help America’s overseas sales rise by 100 percent between the first quarter of 2009 (when he began his presidency) through the end of 2014. With 2014 now half completed in a data sense, real U.S. exports during this period are up only 35.16 percent.