Trade’s drag on recent economic growth and on the current economic recovery increased in the third quarter of this year, according to today’s second revision of the July-September gross domestic product (GDP) figures – even as growth itself was revised down. Since the recovery began in mid-2009, the real trade deficit’s continued rebound has now cut cumulative inflation-adjusted U.S. growth by 8.73 percent, or nearly $180 billion.
The new GDP figures also still showed that the after-inflation trade deficit in the third quarter hit its highest level since early 2008. In addition, real overall exports continued their retreat from the new quarterly record levels revealed in the original third quarter figures, but the new record reported for real overall imports rose even higher. The new record set by goods imports increased again as well. Small upward revisions to levels of services exports and imports pushed each to even higher all-time highs.
Here are the trade highlights from this morning’s GDP report:
>Today’s GDP figures, which present the third and final (for now) read on the third quarter of 2015, show that trade’s damage to the current U.S. economic recovery was even greater than reported in the previous set of data.
>According to the new GDP release, the third quarter inflation-adjusted goods and services trade deficit hit $546.1 billion on an annualized basis – higher than the second quarter’s final (for now) $534.6 billion, and the worst such figure since the $550.4 billion registered in the second quarter of 2008.
>As a result, trade’s impact on growth changed from a net contribution of 0.18 percentage points of a 3.90 percent annualized gain in the second quarter to a 0.26 percent net subtraction from 2.0 percent growth.
>Moreover, the new GDP figures show that the growth of the inflation-adjusted trade deficit has continued to slow the overall economy’s real growth since the current weak recovery began in mid-2009. Had the trade shortfall simply held steady, the economy’s cumulative expansion would have been 8.73 percent greater – $179.8 billion.
>Separate figures (from the Census Bureau) show that the recovery drag of that portion of the trade deficit strongly influenced by trade deals and related policies – the real non-oil goods deficit – has been much greater. Since the second quarter of 2009 through the third quarter of 2015, its increase has cut cumulative recovery-era growth by fully 24.43 percent. Had it simply held steady, cumulative recovery real growth would have been nearly $502.86 billion greater through the end of the third quarter.
> The new third quarter data again revised total U.S. inflation-adjusted exports down from an annualized $2.1221 trillion to $2.1211 trillion – below the all-time high of $2.1239 trillion (achieved in the fourth quarter of 2014). Combined real goods and services exports in the second quarter were $2.1175 trillion – 0.17 percent less.
>Yet the greater amount of total real imports reached record territory again, too. At $2.6672 trillion, was 0.57 percent higher than the second quarter’s $2.6521 trillion – the former high.
>Annualized real goods exports for the third quarter were revised down again as well – from $1.4502 trillion to $1.4488 trillion. As a result, these exports are down from the second quarter’s $1.4520 trillion, and well off the peak level of $1.4743 trillion achieved in the fourth quarter of 2014.
>The revisions, however, pushed the new record for annualized inflation-adjusted goods imports higher still – from $2.1853 trillion to $2.1860 trillion.
>The new records set for real services exports and imports both remained intact in the new third quarter figures as well, although both were revised slightly higher.