(What’s Left of) Our Economy: U.S. Manufacturing Output Held its Own in October

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automotive, Boeing, CCP Virus, civilian aircraft, coronavirus, COVID 19, durable goods, Federal Reserve, industrial production, manufacturing, masks, medical devices, non-durable goods, pharmaceuticals, PPE, vaccines, Wuhan virus, {What's Left of) Our Economy

This morning’s monthly Federal Reserve industrial production report is an object lesson in not counting your real manufacturing output chickens too soon – that is, before the revisions hatch.

So keeping in mind that today’s data will be revised further several times as well, it looks like my concerns last month about manufacturing turning from a CCP Virus-era economic leader into a laggard might have been premature.

Not that today’s release, which brings the story through October, showed gangbuster results. Inflation-adjusted manufacturing output increased by 1.04 percent over September’s levels. Much more encouraging, though, were the continually positive overall revisions and especially those for September. Its initially reported 0.29 percent constant dollar monthly output decline is now reported as a fractional (0.01 percent) increase.

As a result, after having sunk by just over twenty percent from February (the last month before the virus began seriously weakening the economy’s performance) through its April bottom, after-inflation manufacturing production is up by 19.35 percent. Alternatively put, it’s 4.56 percent below the February level, and 3,61 percent lower than last October’s.

Today’s October release also provided more evidence that the automotive sector’s dominant role role in determining overall manufacturing growth has just about faded away. Combined vehicles and parts production remained virtually flat in October, after falling an upwardly revised 3.02 percent sequentially in September.

In addition, October’s figures confirmed that, within manufacturing, the non-durable goods supersector has outperformed its durable goods counterpart – mainly because its first-wave pandemic dropoff was so much less dramatic.

Between February and April, price-adjusted durable goods output (including automotive and the troubled aerospace sector – due to Boeing’s woes and the virus-related travel shutdown) plunged by 27.99 percent, versus a 11.53 percent decline in non-durables (which contains industries like food, healthcare goods, and paper products manufacturing).

Since April real durables output has rebounded by 31.22 percent. But it’s still 5.51 percent lower than in February, and 4.19 percent lower than last October.

Since April, non-durables’ real output is up by 9.06 percent. But since its decline was so much less severe than durables’, in after-inflation terms its production is just 3.51 percent off the February level, and 2.97 percent below last October’s figure.

And what of some of the obvious drivers – for good or ill – of manufacturing output during this CCP Virus era?

Between February and April, aircraft and parts production plunged by 32.85 percent. An astonishing 43.31 percent recovery since has left the sector only 3.77 percent production-wise than in February. But because Boeing’s woes predated the pandemic, this output remains down 17.79 percent year-on-year.

Oddly, constant dollar production of medical equipment and supplies (a category including face masks, protective gowns, and ventilators) dropped by 19.75 percent as the CCP Virus was surging between February and April. And since then, it’s risen only 23.20 percent – including an encouraging 3.54 percent monthly improvement in October. Year-on-year, moreover, these sectors have seen 2.73 percent real output growth, but that improvement suggests how modest – and in retrospect, how inadequate – production was before the pandemic.

Finally, pharmaceutical and medicines production has been steady all year long in inflation-adjusted terms, and advanced by a modest 0.12 percent sequentially in October. Year-on-year, moreover, output has grown by just 0.39 percent – which makes these industries of special interest in the months ahead as mass production of recent promising vaccines ramps up.

For now, though, overall, domestic manufacturing production more than held its own in October. But except for that vaccine production, as the virus second wave strengthens, its near-term future could be just as challenging as that of the rest of the economy and nation

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(What’s Left of) Our Economy: Why Trump’s Solid Trade Record Survives the Lousy New U.S. Trade Report

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automotive, Boeing, CCP Virus, cell phones, civilian aircraft, coronavirus, COVID 19, Made in Washington trade deficit, manufacturing, manufacturing trade deficit, non-oil goods deficit, shutdowns, tariffs, trade deficit, trade war, Trump, U.S. International Trade Commission, Wuhan virus, {What's Left of) Our Economy

This is how bad this morning’s official US. trade figures (for July) looked at first glance for folks like me – who value trade deficit reduction, and believe that trade policies like President Trump’s can make a real difference: When I began examining the data, even though I kept telling myself, “It’s only one month’s worth of statistics,” I scarcely knew what to despair about most.

Yet the “at first glance” point matters a lot. Because when you dig into the weeds, you’ll find plenty of evidence making clear that much of the deterioration had nothing to do with trade policy at all. And the evidence comes in two tables in these monthly trade reports on which I usually pass: Exhibit 7 and Exhibit 8. They cover U.S. exports and imports of goods “by End-Use Category and Commodity” and they provide the report’s most detailed picture of which areas of the economy have performed best and worst trade-wise during the month covered.

They’re not as detailed as those available from the U.S. International Trade Commission’s interactive search engine, but that database isn’t yet updated, so let’s go with what we have to begin seeing exactly where the biggest goods trade deficit increases came in July. (Goods trade, also called merchandise trade, makes up the bulk of U.S. trade flows, and it’s relatively unaffected by the policy decisions made by Washington – including by trade-minded Presidents like Donald Trump – mainly because international negotiations to deal with barriers in these sectors are still in pretty early stages)

Again, from the 30,000-foot level, the July results look terrible. The goods trade shortfall hit $80.91 billion – $9.26 billion, or 12.92 percent, higher than the June figure of $71.65 billion (which mercifully was revised down slightly). That increase proportionately is dwarfed by the record 31.60 jump of March, 1993. But that nearly 18-year old all-time high can be disregarded pretty easily, both because the law of small numbers is at work here (i.e., when you’re dealing with small absolute numbers, relatively small absolute changes can result in outsized percentage changes), and because back in those days, U.S. trade flows were heavily affected by oil trade – another sector of the economy rarely subject to trade policy decisions.

So what mainly accounted for that $9.26 billion merchandise import surge? First of all, we know that more than all of it ($9.94 billion) came in non-oil goods trade. As known by RealityChek regulars, those are the trade flows most heavily influenced by U.S. trade policy. So this increase in the “Made in Washington” deficit seems to reflect badly on decisions made in Washington. Drilling down a little deeper, manufacturing emerges as an even bigger culprit. Its $89.15 billion June trade gap ballooned to $104.63 billion in July – a rise of $15.48 billion. Not so incidentally, that manufacturing trade deficit is the worst ever in U.S. history, eclipsing the $101.65 billion recorded for October, 2018.

Nearly as interesting, though: China trade – where the President has been fighting a war – was not the biggest problem, as the manufacturing-dominated goods gap with the People’s Republic rose by just $3.22 billion. And neither the 11.35 percent on-month increase nor the $31.62 billion total goods gap was anywhere close to a record. 

So we’re back to manufacturing, and figuring out where the big deficit widening took place. Here’s where Exibits 7 and 8 matter.

What they tell us is that the monthly worsening of the merchandise trade deficit was highly concentrated in a handful of industries, and that these latest developments either have little or nothing to do with the Trump tariffs, or actually  demonstrate their effectiveness in widely overlooked ways.

Most relevant of all here is the automotive sector. Between June and July, the deficit in vehicles and parts combined increased by just under $3.20 billion. That represents more than a fifth of the sequential worsening of the manufacturing trade deficit, and nearly a third of the difference in the non-oil goods deficit. But the problem says little about the Trump trade policies, and a great deal about the reopening of U.S. automotive sector in late spring and early summer after the CCP Virus led to its almost complete shutdown in March and April.

From May through July, total American automotive production nearly tripled in real terms, according to the Federal Reserve’s industrial production reports. So it’s no surprise that since production in this industry is so globalized, and thus so many of its parts and materials (and the parts of the parts) are still imported, its trade deficit ballooned, too.

Then there are cell phones. Between June and July, the trade deficit here rose by just under $1.44 billion – 9.30 percent of the increase in the manufacturing deficit, and 14.48 percent of the problem in non-oil goods.

The cell phone category in the monthly trade releases also includes “other household goods” – one of the reasons I don’t love these numbers like I love those available from the International Trade Commission. But it’s reasonable to suppose that most of these goods are cell phones, and that most of these are coming from China – with which the Trump administration of course has been fighting a trade war.

As observed on RealityChek last month, however, Mr. Trump decided not to tariff them. So although cell phone imports indicate that the trade war is incomplete, they certainly don’t show that tariffs don’t work. If anything, they underscore what can happen when they’re missing.

A third major source of the deterioration shown in the new trade report is the civilian aircraft industry – where a surplus of $575 million in June became a $1.50 billion deficit in July. That’s a trade balance worsening of nearly $2.08 billion. In other words, this development alone accounts for 13.44 percent of the lousy July manufacturing trade results and 20.93 percent of the woes in non-oil goods trade flows.

Aircraft’s problems, however, have nothing to do with U.S. trade policy, and everything to with Boeing’s safety failures, which have led to big production shutdowns.

Add up the trade performances of these categories, and together they account for fully 43.38 percent of the manufacturing trade deficit’s increase between June and July, and a whopping 67.57 percent of the monthly rise in the non-oil deficit.

Combine these findings with a U.S. economic recovery that so far has been faster than the bouncebacks of many of its leading trade partners (except, notably, for export-heavy China) and the discouraging July trade figures don’t look nearly so discouraging.

Mission accomplished, then, for the Trump administration? Hardly? But the July trade report is far from a conclusive sign of failure, either. In fact, it leaves any fair-minded evaluation of the Trump trade record pretty much where it’s been since the CCP Virus arrived – deserving of solid grades before the bug arrived, and an incomplete during the completely abnormal times we’ve experienced since then.

(What’s Left of) Our Economy: Full Virus-Distortion Mode for New U.S. Trade Figures

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aerospace, Boeing, CCP Virus, China, civilian aircraft, coronavirus, COVID 19, decoupling, exports, imports, manufacturing, manufacturing trade deficit, Phase One, Trade, Trump, Wuhan virus, {What's Left of) Our Economy

Here’s a heck of a way to start a blog post: On the one hand, it’s a relief to.be writing about something other than the shameful George Floyd killing and its too-often-violent aftermath, and focus on an economic issue like the latest U.S. trade figures. On the other hand, because of the CCP Virus and the deep U.S. and global recessions (and possibly worse) it’s triggered, it’s hard to make the case that the new numbers (for April) even say much of anything useful about that month, much less about how trade flows and their impact on the economy might evolve going forward.

Even less serious is the notion that they shed light on the past, present, or likely future effectivness of President Trump’s Phase One trade deal with China – which incidentally only went into effect in mid-February.

All the same, speaking of China, the month-on-month change was discouraging at least on the surface. The goods deficit nearly doubled between March and April – from $11.83 billion to $22.27 billion. The last change of that magnitude came back in April, 1989, when trade flows were orders of magnitude smaller, and therefore huge fluctuations much easier to generate. Moreover, this trade gap bounceback followed two straight months of dramatic decline that brought the shortfall to its lowest level since March, 2004.

Worth noting in this regard for additional context. On a year-to-date basis, the U.S. goods shortfall with China is down by 28.55 percent. That’s more than three times greater than the 8.17 percent decrease in the global U.S. merchandise deficit, and more than six times faster than the 4.52 shrinkage of America’s worldwide non-oil goods gap, which is a better global proxy for U.S.-China trade.

In other words, here’s clear evidence of major progress toward President Trump’s unstated but apparent goal of decoupling the U.S. and Chinese economies.

U.S. merchandise exports to the economy of the People’s Republic, which by most accounts has started recovering steadily from its own pandemic setback – did rise by 7.94 percent. But the much greater value of imports shot up by 56.88 percent. That’s the biggest percentage increase ever. In second place? The 49.92 jump back in January, 1986, when trade flows were miniscule.

Year-to-date, U.S. goods exports to China are down by 9.03 percent – a little less than overall U.S. goods exports (9.46 percent) and than overall U.S. non-oil goods exports (10.86 percent).

The comparable imports figures: America’s merchandise purchases from China are off by 23.88 percent. That’s more than twice decrease of its total goods imports (9.03 percent) and of its non-oil goods imports (8.45 percent).

In other words, here’s clear evidence that the decoupling and contraction of the bilateral deficit is taking place exactly where it should from an American standpoint – on the import side.

Some other notable takeaways from the April trade report:

>The combined goods and services trade deficit soared sequentially in April by 16.66 percent, to $49.41 billion. That’s the highest monthly total since last August’s $50.78 billion, and the biggest such rise since…March’s revised 22.11 percent.

But that revision is a story in and of itself. The originally reported $44.42 billion figure for the month is now estimated at just $42.34 billion – 4.68 percent lower. That’s an unusually big change, and indicates some major, CCP Virus-related data-gathering and analysis problems.

Year-to-date, the total trade deficit has fallen by 13.36 percent.

>Total U.S. exports took by far the biggest hit in April. plunging by 20.46 percent, from an upwardly revised $190.18 billion to $151.28 billion. That’s the lowest monthly total since the $150.01 billion recorded in April, 2010, when the last economic recovery was still young.

Moreover, the monthly nosedive was both nearly twice as bad as the old record holder of 10.19 percent set in CCP Virus- and shutdown-impacted March, and nearly doubled the previous all-time high (going back to 1992) of 5.50 percent set in September, 2001 – the month of the September 11 terror attacks.

Goods exports fell even faster – by 33.71 percent, from a downardly revised $127.72 billion to $95.52 billion. This contraction has just obliterated the previous record of 10.03 percent, from Great Recession-y December, 2008. (For comparison’s sake, goods exports declined by 5.80 percent in September, 2001).

>Combined goods and services imports were down dramatically, too, on month in April. But although an all-time high, the 13.36 percent decline — from an upwardly revised $232.52 billion to $200.69 billion – was much smaller than that for exports. In addition, it only slightly exceeded the previous monthly record of 11.58 percent, from the Great Recession month of November, 2008. Further, as with exports, the new April monthly total was also the lowest since April, 2010.

April’s monthly goods import decrease was only a bit greater – 13.62 percent, from an upwardly revised $193.74 billion to $167.35 billion. The monthly level was the lowest since November, 2010 and the rate of decrease just a hair above that of the aforementioned November, 2008.

>The longstanding and huge U.S. manufacturing trade deficit also grew sequentially in April – by 9.63 percent, from $75.08 billion to $82.31 billion..That was the biggest monthly total since October, 2019’s $92.70 billion.

Manufacturing exports sank by 30.51 percent on month in April, while the much larger value of imports was 12.78 percent lower.

Interestingly, the sequential worsening of the manufacturing trade shortfall was dominated by the country’s civilian aerospace industry – once far and away America’s trade surplus and surplus growth leader. But between March and April, this surplus tumbled by 73.21 percent, from $4.05 billion to $1.09 billion. The $2.97 billion decrease accounted for fully 41 percent of the widening of the manufacturing trade gap, and stems from the combined impact of aerospace giant Boeing’s continuing safety woes and production cutbacks, the virus-induced global recession, and its especially great impact on the travel industry.

Year-to-date, moreover, the manufacturing trade gap has narrowed by 6.62 percent, from $324.59 billion to $303.59 billion.

(What’s Left of) Our Economy: The New U.S. Trade Figures Validate Trump’s (Previous?) Hard Line

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aircraft, Boeing, China, civilian aircraft, goods exports, goods imports, goods trade, manufacturing, merchandise exports, merchandise imports, merchandise trade, Mexico, North America, services trade, soybeans, tariffs, Trade, trade deficit, Trump, {What's Left of) Our Economy

The new U.S. monthly trade data, which bring the story up through November, are teaching President Trump and the rest of the country a crucial lesson about his total trade strategy and his approach to China trade, along with their impact on the economy as a whole. Specifically, the hard line he was pursuing with the People’s Republic before the announcement of the “Phase One” trade agreement was working like a charm.

The new numbers also make clear that many of U.S. domestic manufacturing’s troubles this year, including its mediocre trade performance, have had nothing to do with the Trump tariffs whatever – whether on Chinese products or foreign aluminum and steel. Instead, they owe to the (apparently mounting) safety woes of aircraft giant Boeing.        

The initial Phase One announcement (on October 11) revealed that the United States would hold off on an increase of tariffs from 25 percent to 30 percent on $250 billion worth of goods imports from China (largely advanced manufactures inputs) that was scheduled to go into effect on October 15. On December 13, Mr. Trump added that new levies scheduled to go into effect on December 15 on an additional $160 billion worth of merchandise imports would be canceled as well.

In return, according to the President, Beijing has agreed to “many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more.” Moreover, 7.5 percent tariffs would remain on most of the rest of China’s imports along with the two governments agreeing to follow-on negotiations to address further China’s wide range of predatory trade and broader economic practices.

The new trade figures show that U.S. merchandise exports to China have indeed risen since October – by 13.69 percent month-to-month. Also up sequentially (by 21.89 percent) are total worldwide U.S. exports of soybeans – a crop whose trade performance was damaged severely by Chinese retaliatory tariffs since the latest phase of the bilateral trade war broke out.

But whether the Phase One deal and the related prospects for an enduring U.S.-China trade truce deserve much, if any, credit is open to serious doubt. For example, American goods exports to China rose sequentially four times in 2018 through September – before even the initial Phase One announcement. And two of these increases (in March and May) were bigger in percentage terms than the November improvement.

Moreover, although the November monthly shrinkage of the China’s huge bilateral goods trade surplus with the United States was substantial (15.65 percent), the surplus fell at faster rates in February and March.

Yet the cumulative success of Mr. Trump’s tariff-centric policies are clear from the new year-to-date results. On a January-through-November basis, U.S merchandise exports to China are indeed off 11.94 percent. But the much larger amount of American goods imports from China have fallen by 15.22 percent. As a result, the year-to-date merchandise trade deficit is down 16.17 percent.

Further, this progress has been made as the growth of the American global goods deficit has actually been reversed – indicating that attacking the prime source of the U.S. worldwide goods deficit is indeed helping address the global shortfall effectively.

On a year-to-date basis, the global goods deficit is down fractionally. If the trend continues for a month more, the merchandise trade gap will have narrowed on an annual basis for the first time since 2013 – a year during which the overall economy grew at a considerably slower pace (1.8 percent after inflation) than it’s been growing this year (well in excess of two percent so far in real terms).

Much of this improvement is due to America’s emergence as an oil trade surplus country (which has almost nothing to do with trade deals or other elements of trade policy, since oil trade is rarely directly affected by trade policy decisions). Yet the massive U.S. global deficits in goods other than oil have been shrinking steadily since August – from $72.75 billion that month to $63.82 billion in November, the lowest monthly total since June, 2018).

Just as important, the makeup of the remaining American merchandise deficit is becoming concentrated in North America – which benefits the United States significantly, since Mexico’s economic problems in particular often become America’s problems. And year-to-date, the total U.S. goods deficit with North America (Canada and Mexico), widened by 27.05 percent, led by a 27.64 percent rise in the Mexico gap.

Nonetheless, the merchandise deficit with Pacific Rim countries excluding China has grown by 22.47 percent year-to-date, so much more regionalization progress can clearly be made.

In other important developments revealed by today’s November trade report, the monthly U.S. combined goods and services deficit shrank sequentially by 8.31 percent to $43.09 billion from a downwardly adjusted $46.94 billion. The November figure was the lowest monthly total since October, 2016 ($42.00 billion).

November’s $63.90 billion global goods deficit (which includes oil) also represented its lowest level since October, 2016 ($62.02 billion).

Yet U.S. services trade continued to experience a weak year, as the surplus decreased sequentially in November (by 0.19 percent) and is running 4.72 below 2018’s total so far.

Total U.S. exports advanced by 0.66 percent on month in November, but are so far down fractionally on a year-to-date basis. (During the previous January-through-November period, they’d risen by 6.98 percent.)

Total U.S. imports dropped by 0.98 percent sequentially in November, and so far are down 0.14 percent year-to-date. (During the previous January-through-November period, they’d increased by 8.20 percent.)

Encouraging news came on the manufacturing trade front, too, as this sector’s enormous, longstanding deficit fell on month by 12.70 percent, to $80.93 billion. That was the lowest monthly level since March’s $76.96 billion and the biggest monthly percentage drop since February’s 20.00 percent.

U.S. manufactures exports declined by 3.81 percent on month in November, but the much greater amount of imports sank by 8.16 percent.

Year-to-date through November, the manufacturing trade deficit is up 1.69 percent – from $935.74 billion to $951.55 billion. In other words, another $1 trillion annual trade deficit is almost certainly in store for U.S. domestic manufacturing.

At the same time, this rate of increase is much slower than that from the same period in the year before: 10.98 percent.

In addition, this manufacturing progress has been recorded despite a major deterioration in U.S. civilian aircraft trade fueled undoubtedly and largely by the safety problems experienced by Boeing. 

The company – America’s only producer of wide-body civilian jetliners – has long been a major export and trade surplus champion.  But U.S. exports of civilian aircraft dropped by 5.77 percent on month in November, and have nosedived by fully 21.77 percent year-to-date.  Civilian craft imports declined at an even faster rate sequentially in November – fully 39.59 percent.  But the numbers are much smaller, and year-to-date through November, they’ve soared by 19.39 percent.

As a result, the U.S. civilian aircraft trade surplus last year through November stood at only $27.22 billion.  That’s a 33.02 percent plunge from 2018’s comparable total of  $40.64 billion.  And it means that, all else equal, if this sector’s 2019 trade performance simply equalled that of the year before, the overall manufacturing trade deficit would have barely grown at all.   

 

 

(What’s Left of) Our Economy: Boeing’s Safety Woes are Hammering U.S. Manufacturing & Overall Trade Flows Under Trump

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Airbus, Boeing, civilian aircraft, exports, imports, manufacturing, non-oil goods trade deficit, safety, services trade, tariffs, Trade, trade deficit, Trump, World Trade Organization, {What's Left of) Our Economy

When last month’s U.S. trade figures (for August) came out, I wrote about how the economic narratives about the woes of domestic manufacturing and America’s trade accounts during the Trump Tariffs Era have been turning into a story about the safety related troubles of Boeing. This morning, the September data were issued, and the Boeing drag on the trade performances of industry and the entire economy look bigger than ever. Especially interesting, the Boeing effect worsened during a data month when total U.S. trade, manufacturing trade, and civilian aircraft trade all took modest turns for the better.

Specifically, the overall U.S. trade deficit in September dropped by 4.70 percent, from an upwardly revised $55.04 billion to $52.45 billion. The total was the lowest since April’s $51.98 billion, and the sequential decrease the biggest since January’s 12.61 percent nosedive.

Partly as a result, the year-to-date trade deficit is up by 5.47 percent – a rate of increase less than half that of the previous year’s 12.68 percent.

Combined goods and services exports rose by 0.88 percent from $207.83 billion to $205.99 billion – their worst monthly performance since April’s $205.76 billion. Total imports, however, sank by nearly twice as much proportionately – 1.68 percent. And September’s $258.44 billion figure was also the lowest since April ($257.74 billion).

Services trade, however, provided an oddly glum counterpoint. It’s long been a trade surplus generator, and remained so in September. But the new monthly surplus of $19.27 billion was the lowest since December, 2012’s $18.55 billion. The main culprit? The fourth straight high for monthly services imports ($49.89 billion).

At the same time, the huge and chronic manufacturing trade deficit fell sequentially in September for the second straight month, from $92.08 billion by 4.53 percent, to $87.91 billion. That total was the best since June’s $83.63 billion. And this progress was mirrored in civilian aircraft. Their exports jumped month-to-month in September by 25 percent. Imports rose even faster – by 41.58 percent. But their amount is much smaller ($1.35 billion vs $3.29 billion). Therefore, the civilian aircraft trade surplus improved from $1.69 billion to $1.95 billion.

What, then, is the problem? It becomes glaringly visible upon examining trade in civilian aircraft during the entire stretch of Boeing’s current woes (which essentially began this past March with many national aviation authorities grounding the plane in their own countries’ airlines, and/or barring it from their national air spaces), and comparing it with the aircraft trade figures for the same periods of previous years, and with the performance of overall manufacturing exports and imports.

Last month, I described how civilian aircraft’s trade performance between this past April (the first full month in which the Boeing effect could be expected to begin showing up) and August had deteriorated markedly from the same period last year. Today’s trade data show that the deterioration has grown far worse.

As made clear in last month’s post, despite its reputation as a major American trade winner, the civilian aircraft sector has experienced ever poorer results since 2017, and the new trade figures confirm this trend.

Between April and September of 2017 and April and September of 2018, civilian aircraft exports fell by 10.32 percent, even though overall U.S. manufacturing exports increased by 6.84 percent. The industry’s record on the import side was better – they dropped during this time by 13.98 percent, while manufacturing imports in total climbed by 11.64 percent.

But the comparison between the following April-to-September periods looks considerably drearier for aircraft. Between April and September of last year and the same period this year, although manufacturing exports were down by 3.82 percent, civilian aircraft foreign sales sank by 26.80 percent. And although manufacturing imports edged up only 0.27 percent between these periods, American purchases of civilian aircraft surged by just over 26 percent.

Further, the impact of aircraft’s slump on manufacturing and overall U.S. trade has been substantial and growing. As of last month’s trade report, the fall in these products’ exports between the April-August 2018 and April-August 2019 periods accounted for 30.72 percent of the decrease in total manufacturing exports during that time, and 16.81 percent of the increase in total manufacturing imports.

As of today’s figures, the civilian aircraft share of manufacturing’s total export decline is up to 31.35 percent of the total, while their share of industry’s total import increase has shot up to more than half manufacturing’s total.

Expanding the focus to all U.S. goods trade except for energy products (which to date haven’t received significant attention in free trade negotiations or any other aspects of American trade diplomacy) also reveals a sizable Boeing effect. Between the April-September 2018 and 2019 periods, civilian aircraft’s export decline accounted for fully 42.39 percent of the total U.S. non-oil goods export decrease recorded then, and 20.61 percent of the non-oil goods import increase.

In addition, to repeat a crucial point, this major Boeing effect on manufacturing and overall trade has absolutely nothing to do with the Trump trade wars, since civilian aircraft so far have not been subjected to foreign tariffs on American exports imposed in retaliation for Mr. Trump’s levies. This situation will change due to recent and upcoming rulings in the long-running World Trade Organization case between Boeing and the European Union’s Airbus. But as of now, any evaluation of the Trump effect on U.S. trade flows ignoring the powerful drag created by Boeing’s troubles deserves a grade of “incomplete” – at best.