Government figures issues this morning showed that the monthly April trade deficit staged a major retreat following its greatest monthly surge in 18 years and the biggest monthly import rise on record. The trade gap heavily influenced by free trade agreements and related policies (in non-oil goods adjusted for inflation) narrowed significantly as well after a multi-decade monthly jump. But it still remained at its second highest level of all time.
Thus as Congress continues to debate President Obama’s trade agenda, the trade policies pursued by him and predecessors have continued slowing growth during this current feeble recovery by nearly 20 percent. Moreover, America’s trade performance remained miserable with Korea, whose agreement with the United States is the model for the president’s proposed Pacific Rim agreement. In addition, though falling from its March all-time monthly high, the April manufacturing trade deficit remained historically lofty and the shortfall is running more than 17 percent ahead of last year’s record.
Here are selected highlights of the latest monthly (April) trade balance figures released this morning by the Census Bureau:
>The combined goods and services trade deficit plunged in April from a downwardly revised $50.57 billion to $40.88 billion. The 19.16 percent monthly drop was the biggest since February, 2009, the depths of the Great Recession, and followed a 35.75 percent (downwardly revised) rise that was the greatest since December, 1996.
>The April trade balance improvement was led by a 3.26 percent monthly drop in goods and services imports, to $230.78 billion from a downwardly revised $238.57 billion. That decline was the largest since January, and followed imports’ own monthly record jump of 6.50 percent in March.
>Exports also rose in April, but only by 1.01 percent, to $189.91 billion, from an upwardly revised $188 billion level in March.
>As Congress’ debate over President Obama’s trade agenda heads into the House following the administration’s Senate victories, the April trade report confirmed that the portion of the trade balance most heavily influenced by trade policy continues crippling the U.S. recovery.
>This policy-shaped balance – in real non-oil goods – sank by 13.18 percent on month in April, from an all-time high of $62.01 billion to $53.84 billion. That fall-off was the most since February, 2009 as well, and followed a 28.36 percent increase that was its greatest since August, 1997. Yet the April total is still the second greatest on record.
>Since rising trade balances subtract from economic growth, the increase in this real non-oil goods deficit has now cut cumulative U.S. economic growth after inflation by a stunning 19.49 percent since the recovery technically began in mid-2009.
>Further doubts about the administration’s trade strategy were fueled by the continuing poor U.S. performance with South Korea, whose 2012 trade agreement with Washington is viewed by the president as the model for his proposed Trans-Pacific Partnership (TPP) trade deal.
>Even as the U.S. goods deficit worldwide declined by 13.33 percent in March, it rose by 13.68 percent with Korea. On a monthly basis, this shortfall has now nearly quintupled (to $2.50 billion) since the agreement went into effect in March, 2012.
>During this period, U.S. merchandise exports to Korea have actually fallen on a monthly basis by 2.76 percent – from 4.23 billion to $4.11 billion.
>The April trade figures showed similar trends in the huge and chronic U.S. manufacturing trade deficit. The shortfall decreased from March’s all-time high of $71.96 billion to a $66.70 billion, but that figure is still historically lofty.
>Largely as a result, this year’s $253.78 billion manufacturing trade deficit to date is running 17.18 percent ahead of last year’s record pace.
>As operations in West Coast ports continued returning to normal in April, manufactures imports fell by 4.63 percent on month, to $163.24 billion. Manufacturing exports declined by 2.70 percent, to $96.54 billion.
> Thanks also in part to the gradual restoration of full service at West Coast ports, March manufacturing exports rose on month by 15.39 percent. But the much larger amount of imports soared by an even greater 23.80 percent.
>Year to date, manufacturing imports have increased by 3.65 percent, but exports have worsened by 3.95 percent.
>The U.S. goods trade deficit with proposed TPP partner Japan fell fractionally on month in April, from $7.13 billion to $7.12 billion. But this shortfall is up 6.76 percent year on year and the April total marks only the third time since the American recovery began that the monthly figure topped $7 billion.
>Japan has often undervalued its currency to achieve trade advantages, but the Obama administration and the Republican leadership in Congress oppose including strong measures in the TPP to fight this exchange-rate protectionism.
>Similarly, the immense U.S. merchandise trade deficit with China sank month to month in April by 15.23 percent, but is running 12.73 percent higher than last year’s record.
>The Korea, Japan, and China goods deficits are all up year-to-date much faster than the global U.S. goods deficit (0.40 percent).