The new GDP revisions released today by the Commerce Department report that America’s trade performance has slowed the current already sluggish recovery to an even greater degree than previously thought, and that an even greater toll has been taken by the portion of U.S. trade flows strongly influenced by American trade policies and deals (like those currently being pursued by President Obama).
In addition, the historically huge bite taken out of first quarter growth this year turns out to have been even bigger, relatively speaking, and although all major import categories set new quarterly records in the second quarter, the same can’t be said for most exports.
Here are the trade highlights from this morning’s GDP report:
>Today’s GDP figures, which present initial second quarter 2015 estimates and revised 2011-2014 data, reveal that inflation-adjusted U.S. trade flows had hampered the current weak recovery through the first quarter more than previous estimates indicated. This development reversed itself only to a small degree in the second quarter.
>The new figures also show that the all-time record relative bite taken from growth by trade in the first quarter of this year was even greater than first judged.
>The new data show that the increase in America’s constant dollar trade deficit since the recovery began in the mid-2009 had slowed cumulative growth by 8.97 percent through the first quarter of 2015. The new data report a 9.33 percent drag – because overall after-inflation growth was lower and because the real trade deficit’s increase was greater than first estimated.
>According to these new figures, in the second quarter of 2015 (the latest data available), a small decrease in the real trade deficit from the first quarter to the second quarter – from the upwardly revised $541.2 billion annualized to $536.3 billion – resulted in trade flows adding 0.13 percentage points to the annualized inflation-adjusted growth figure of 2.30 percent.
>In the second quarter, real total exports rose at a 5.30 percent annualized rate after falling by an upwardly revised 6.00 percent annualized rate in the first quarter. Second quarter real total imports increased only by an annualized 3.50 percent rate – less than half the pace of the first quarter’s 7.1 percent increase, which was left unchanged.
>The new first quarter real trade deficit was the nation’s highest since the second quarter of 2008 ($550.4 billion) and the new second quarter figure is the second highest since then.
>Nonetheless, however discouraging, these recovery-era numbers mask the even greater toll taken out of the recovery by trade flows that are heavily influenced by trade deals and other trade policy decisions. The reason: They include trade in services, where trade liberalization is in relatively early stages, and in oil, which is not dealt with via conventional trade policy.
>When real oil and services trade flows are omitted, the new GDP data reveal that through the first quarter, the increase in the inflation-adjusted trade deficit cut cumulative recovery growth by 21.02 percent – with nearly all of the damage done in the private sector.
>The previous GDP data had reported a 19.82 percent hit to the recovery from the growth of the real policy-shaped trade deficit.
>Preliminary trade figures for June, which will permit calculation of the policy-induced trade hit to real growth through the second quarter, will be released next week.
>According to the revisions, the real trade deficit’s sequential worsening subtracted 1.92 percentage points from the first quarter’s 0.64 percent growth. That’s a bigger proportional hit than the 1.89 percentage point subtraction from a 0.20 real GDP percentage point decline that was previously estimated – and that represented the worst relative trade bite since quarterly changes began to be tracked (in 1947).
>The biggest absolute trade hit to real growth occurred in the third quarter of 1982 – a 3.22 percentage point subtraction. But in that quarter, overall GDP fell at a much greater 1.40 percent annualized rate.
>According to the new figures, the second quarter saw new quarterly records for real imports of goods and services combined, goods and services separately, and services exports.
>Inflation-adjusted combined imports totaled an annualized $2.6550 trillion in the second quarter – higher than the first quarter’s previous record of $2.6325 trillion, which was revised down.
>Inflation-adjusted goods imports totaled an annualized $2.1807 trillion in the second quarter – higher than the first quarter’s previous record of $2.1611 trillion, which was revised up.
>Inflation-adjusted services imports totaled an annualized $427.7 billion in the second quarter – higher than the first quarter’s previous record of $469.8, which was revised down.
>Inflation-adjusted services exports totaled an annualized $664.4 billion in the second quarter – higher than the first quarter’s previous record of $660.6 billion, which was revised down.