The government’s release of final (for now) figures for second quarter 2016 gross domestic product (GDP) showed that the constant dollar trade deficit was smaller ($558.5 billion annualized) than the upwardly revised figure ($562 billion). As a result, the trade contribution to real growth rose in absolute and relative terms (0.18 percentage points to a 1.41 percent annualized expansion after inflation versus 0.10 percentage points to 1.09 percent real growth). This growth contribution was the best in absolute terms since the third quarter of 2014.
The second quarter real trade deficit was down from the first quarter’s $566.3 billion annualized total, but still came in as the third largest largest quarterly result since the first quarter of 2008 ($623.7 billion) – just after the start of the Great Recession. Trade’s cumulative drag on the economic recovery, therefore, stood at 8.63 percent, and the toll taken by the Made in Washington (real non-oil goods deficit) remained at 19.70 percent – nearly $439 billion after inflation. Both total real exports and imports rose slightly from the final first quarter totals, though they both are still modestly off their all-time highs.
Here are the trade highlights from this morning’s GDP report:
>According to the U.S. government’s final (for the time being) official look at inflation-adjusted economic growth in the second quarter of 2016 brought down the previously reported U.S. trade deficit (from $562 billion to $558.5 billion) and brought up its contribution to real growth.
>The previous second quarter GDP report pegged trade’s growth contribution at 0.10 percentage points out of 1.09 percent annualized expansion after inflation. Today’s figures revealed an increase in this figure to 0.18 percentage points out of 1.41 percent annualized growth – the highest such total in absolute terms since 0.50 percentage point boost given by trade to 5.00 percent annualized inflation-adjusted growth in the third quarter of 2014.
>In the first quarter, trade increased real annualized growth of 0.83 percent by 0.01 percentage points.
>The final $558.5 billion second quarter trade deficit was 1.38 percent lower than the final first quarter figure of $566.3 billion. But it was still the third highest total since the $627.3 billion recorded for the first quarter of 2008 – right after the start of the Great Recession.
>The new GDP figures took the toll exacted by rising real trade deficits during the current economic recovery to a cumulative 8.63 percent – which translates into $192.2 billion in lost after-inflation growth.
> Data kept separately by the U.S. Census Bureau show that the growth toll exacted by the Made in Washington trade deficit as of the second quarter has been much higher – just short of $439 billion after inflation. In other words, real growth during the current economic recovery has been 19.70 percent lower in toto simply because this inflation-adjusted trade gap – in the non-oil goods flows heavily affected by trade agreements and similar trade policies – has risen so dramatically.
> Today’s GDP revision pegs combined real goods and services exports at $2.1113 trillion annualized – 0.15 percent higher than the downwardly revised $2.1081 trillion result reported last month. This total is also 0.44 percent higher than the final first quarter level of $2.1020 trillion, but 1.90 percent below the all-time high for total real exports – the fourth quarter 2014’s $2.1523 trillion.
>Total real imports were pegged at $2.6697 trillion annualized in this final read of the second quarter. That’s fractionally lower than the upwardly revised figure of $2.6701 trillion reported last month – but still a new record. It’s also fractionally higher than the first quarter’s $2.6682 trillion.
>The real goods export total reported today – $1.4301 trillion annualized – was almost unchanged from the previously reported $1.4303 trillion annualized, and 0.42 percent higher than the final first quarter number of $1.4241 trillion.
>Real goods exports peaked in the fourth quarter of 2014, at $1.4745 trillion annualized – 3.01 percent higher than the latest figure.
>The real goods imports numbers reported today were unrevised at $2.1943 trillion annualized, and were fractionally higher than the first quarter’s $2.1941 trillion. Real goods imports’ all-time high ($2.2014 trillion annualized) came in the fourth quarter of 2015.
>Second quarter real services exports were revised significantly higher in this morning’s report – by 0.46 percent, from an upwardly revised $677.4 billion annualized to $680.5 billion. This level is 0.47 percent higher than the final first quarter figure of $677.3 billion annualized, but 0.51 percent below the record ($684 billion) set in the first quarter of 2015.
>The real services import total for the second quarter was lowered fractionally, from a downwardly revised $473.6 billion annualized to $473.2 billion. But it still represented a new record, beating the previous all-time high ($471.9 billion), set in the first quarter of this year, by 0.28 percent.