(What's Left of) Our Economy. trade, Census Bureau, China, exports, Germany, high tech goods trade, imports, Made in Washington trade deficit, manufacturing, non-oil goods trade deficit, recovery, services trade, South Korea, Trump
America’s goods and services trade deficit decreased by 2.27 percent sequentially in May, to $46.51 billion, as services exports ($64.82 billion) and services imports ($43.84 billion) both hit all-time monthly highs. Combined exports rose 0.45 percent on month to $192.03 billion – their best total since April, 2015 ($192.59 billion).
But the huge, chronic U.S. manufacturing trade shortfall jumped by 13.92 percent, to $80.10 billion, its second highest level ever (after last November’s $80.75 billion). Merchandise exports to South Korea – whose free trade deal with the United States has been faulted by President Trump – rose sequentially to a record monthly level of $4.49 billion. Yet the immense U.S. goods trade deficit with China soared by 14.39 percent, to an eight-month high of $31.61 billion. The jump came amid signs of higher overall U.S.-China tensions.
And the overall year-to-date U.S. trade deficit of $233.07 billion was its highest since January-May, 2012’s $238 billion, when growth was somewhat faster. In fact, the cumulative trade drag on the long but weak American economic recovery (as of the first quarter of 2017) remained above 10.50 percent (representing nearly $230 billion in lost inflation-adjusted growth). Nearly twice as great has been the growth hit from the increase in the Made in Washington real non-oil goods deficit was still nearly twice as great.
Here are selected highlights of the latest monthly (May) trade balance figures released this morning by the Census Bureau:
>In May, the total U.S. trade deficit dropped by 2.27 percent, from a downwardly adjusted $47.59 billion to $46.51 billion.
>Highlighting the results were record services exports ($64.82 billion) and services imports ($43.84 billion). The services trade surplus improved by 1.04 percent on month, from April’s upwardly adjusted $20.77 billion to $20.99 billion.
>The total trade deficit’s narrowing was also helped by the best monthly combined goods and services exports figure ($192.03 billion) since April, 2015’s $192.59 billion. The May total export level was 0.45 percent higher than April’s upwardly adjusted $191.17 billion.
> Total imports inched down by a mere 0.09 percent in May, from April’s upwardly adjusted $238.76 billion to $238.54 billion.
>Another May record: U.S. merchandise exports to South Korea, whose 2012 trade agreement has been criticized by President Trump. These American goods sales reached $4.49 billion – a 1.48 percent increase over April’s $4.43 billion.
>U.S. goods imports from South Korea declined by 3.65 percent on month in May, to $5.96 billion, and the merchandise deficit plummeted by 16.60 percent, to $1.46 billion. That total, however, is still nearly three times greater than the trade gap when the trade treaty went into effect in March, 2012 ($561 million).
>At the same time, as Mr. Trump has soured on China for North Korea-related reasons, the PRC’s mammoth goods trade surplus with the United States jumped 14.39 percent sequentially in May to $31.69 billion – an eight month high.
>U.S. goods exports to China climbed by 3.59 percent sequentially in May, but imports were up much faster – by 11.56 percent.
>Year-to-date, moreover, the China merchandise trade surplus is up 5.28 percent.
>The widening of the China gap could largely explain the big (13.92 percent) sequential deterioration of the huge, chronic U.S. manufacturing trade deficit – from $70.31 billion in April to $80.10 billion in May. That May figure is the second worst on record, after last November’s $80.75 billion.
>Manufacturing exports advanced by 3.80 percent on month in May, from $89.26 billion to $92.65 billion.
>But the far larger amount of manufacturing imports soared by 8.26 percent, from $159.57 billion to $172.75 billion.
>These results pushed the January-May manufacturing trade deficit up 6.96 percent, to $356.226 billion.
>Year-to-date manufacturing exports have risen by 3.67 percent in 2017. But the much larger amount of imports is up 5.10 percent.
>The good May results notwithstanding, the total U.S. trade deficit for the first five months of 2017 ($233.07 billion) was the worst such figure since the $238 billion of 2012 – when economic growth was somewhat faster.
>America’s trade performance with Germany, which the president also has criticized, provided better news in May. The U.S. merchandise shortfall dropped by 8.90 percent on month, to $4.99 billion, as American goods exports advanced and imports fell. And year-to-date, the bilateral gap is down by 6.73 percent.
>Less encouraging were May’s high tech goods trade numbers – which tend to be volatile. The American global deficit in this category skyrocketed by 56.73 percent, to $9.47 billion.
>U.S. high tech goods exports were off only by 0.51 percent sequentially, to $28.48 billion. But imports rose by 9.46 percent, to $37.95 billion.
>Year-to-date, the high tech goods gap has ballooned by 37.13 percent – to $34.58 billion. As with the overall trade deficit, that’s the highest figure since the first five months of 2012 ($35.21 billion).
>The cumulative trade drag on the long but slow American economic recovery stood at 10.66 percent as of the first quarter of 2017. That means that the increase in the inflation-adjusted trade deficit since the expansion began in the second quarter of 2009 has cut real economic growth during this period by $229.3 billion.
>The trade drag of the Made in Washington trade deficit – which adjusts trade flows for inflation and omits service and energy trade flows that are only lightly affected by U.S. trade policy – has been nearly twice as great. As of the first quarter, it stood at 20.57 percent of cumulative growth, or a $441.51 billion hit.
>Between April and May, this real non-oil goods trade deficit grew shrank from $62.23 billion to a still lofty $60.38 billion. If June’s total is comparable, the Made in Washington trade drag on the recovery will rise yet higher, and will be calculable once the second quarter gross domestic product figures are released.