(What’s Left of) Our Economy: CCP Virus-Era U.S. Trade Figures Continue to Astound

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CCP Virus, coronavirus, COVID 19, exports, GDP, goods trade, Great Recession, gross domestic product, imports, inflation-adjusted growth, real GDP, real trade deficit, services trade, trade deficit, Wuhan virus, {What's Left of) Our Economy

Meet the new third quarter U.S. gross domestic product (GDP) figures. Practically the same as the old third quarter figures – including on the trade front. The nearly identical 33.1 percent inflation-adjusted annualized growth revealed in today’s second official look at the economy’s performance between July and September remains as meaningless in terms of the fundamentals as it is breathtaking.

After all, it’s completely distorted by the CCP Virus pandemic and resulting shutdown-like decisions and altered consumer behavior that now seem likely to end sooner rather than later due to recently announced vaccine progress. (More industry-specific shifts involving sectors like higher education and business travel and real estate and on-line shopping and the like? They’re of course shaping up as very different stories.)

But it’s worth reviewing the trade highlights of this morning’s figures (and the very similar numbers reported last month) to show just what incredible statistical outliers the pandemic and the government and consumer responses have produced.

The after-inflation quarterly trade deficit came in at $1.0164 trillion at an annual rate – a little worse than the $1.0108 trillion initially estimated. But that’s a staggering 31.13 percent increase from the second quarter total of $775.1 billion – a jump that positively dwarfs the previous record increase of 13.18 percent between the first and second quarters of 2010.

And keep in mind that jump came as the nation was rebounding from the Great Recession – which at that point was its worst economic slump since the Great Depression. Indeed, as reported last month, that quarter’s annualized growth rate was only 3.69 percent – only about a ninth as strong.

Because this year’s third quarter real trade deficit increased slightly while the economy’s growth remained essentially the same (for the record, the new GDP increase number was fractionally smaller than last month’s advance read), the hit to growth from that trade gap rose as well. Its subtraction from growth is now judged to be 3.18 percentage points, not 3.09. Only the 3.22 percentage points cut from growth in the third quarter of 1982 have bit deeper in relative terms.

The bigger trade deficit figure resulted from total imports that rose faster than exports. Last month, the Commerce Department estimated that the former were 12.42 percent greater than the second quarter level. Now the increase is pegged at 12.56 percent. The previous quarterly total import growth figure – which in absolute terms is much bigger – has been increased from 17.58 percent to 17.89 percent.

But where these changes stand in U.S. trade history is nothing less than stunning. The quarterly total import data go back to 1947, and their growth in the third quarter of this year was the strongest since the 21.88 percent recorded in the second quarter of 1969.

The quarterly total import statistics also began in 1947, and on this count, the third quarter’s increase was the worst since the 23.47 percent surge in the third quarter of 1950. These latest trade performances are all the more eye-opening upon realizing that overall U.S. trade flows in 1969 and 1950 were so much smaller than they are today, meaning that big percentage increases were much easier to generate.

The quarterly real trade figures for goods and services individually only go back to 2002, but although the timeframes are much shorter, they’re equally special. During the third quarter of this year, the sequential improvement in goods exports is now reported as 19.60 percent. That’s an all-time high that far surpasses the next best performance – the 6.94 percent advance achieved in the fourth quarter of 2009, during the recovery from that previous Great Recession.

Goods imports in the third quarter soared by 20.08 percent – again dwarfing the previous record of 5.67 percent not-so-coincidentally also recorded in that fourth quarter of 2009.

The story with services trade – which has received an historic blow both nationally and globally from the virus and the shutdowns – interestingly is somewhat less dramatic for the third quarter. Constant dollar services exports only inched up by 0.21 percent in the third quarter, from $582.1 billion annualized to 583.3 billion. These industries clearly are still reeling from the 20.27 percent sequential export collapse they experienced between the first and second quarters, and the 5.67 percent drop between the fourth quarter of 2019 and the first quarter of this year. As a result, these exports in real terms are sitting at their lowest levels since the second quarter of 2010.

Price-adjusted services imports rose a much faster 5.91 percent after inflation between the second and third quarters. But that increase was only the second biggest on record – after the 7.04 percent jump in the third quarter of 2003. These more modest historical changes reflect the impressive growth in services trade for most of this century – albeit from a base much smaller than that of goods trade.

Please keep in mind that the individual goods and services trade figures still don’t add up to the totals, as I first reported in September. But they’re not that far off, either, which means that the overall third quarter numbers still seem reliable enough, and still confirm how unusual CCP Virus-era trade flows have been – and are likely to be until the nation reaches the Other Side.

(What’s Left of) Our Economy: Records and More Puzzles in the GDP Report’s Trade Numbers

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(What's Left of) Our Economy, CCP Virus, Commerce Department, coronavirus, COVID 19, exports, GDP, global financial crisis, goods, Great Recession, imports, inflation-adjusted growth, real GDP, real trade deficit, recession, services, Trade, trade deficit, Wuhan virus

So many all-time and multi-year and even decade worsts revealed by the trade data revealed in the official U.S. economic growth figures released this morning! And even though these data on changes in the gross domestic product (GDP) for the third quarter of this year are pretty meaningless from an economic standpoint – because they’re so thoroughly distorted by the government-ordered shutdowns and reopenings due to the CCP Virus – they’re worth noting for the record, anyway.

But here’s something else worth noting – as with the last batch of GDP figures (the final-for-now results for the second quarter), the trade figures don’t seem to add up.

Let’s start with the records. Largely due to the strongest sequential U.S. growth on record (33.1 percent after inflation on an annualized basis), fueled by significant reopening plus massive government stimulus or relief funds (choose your own label), the quarterly inflation adjusted trade deficit hit an astounding $1.0108 trillion annualized. (The inflation-adjusted, or “real,” statistics are the ones most closely followed; therefore, unless otherwise specified, they’ll be the ones used from hereon in.)

Not only was that total a record in absolute terms. The 30.41 percent increase from the final second quarter level of $775.1 billion was the biggest since the Commerce Department began presenting trade deficit figures (as opposed to the simple export and import findings) in 2002. For context, the next greatest such jump was only 13.18 percent, between the first and second quarters of 2010.

The economy was recovering then, too – from the Great Recession that followed the global financial crisis – but that quarter’s annualized growth rate was only 3.69 percent.

As known by RealityChek regulars, the GDP reports treat increases in the trade deficit as subtractions from growth, and the third quarter’s was the worst in absolute terms (3.09 percentage points from that 33.1 percent annualized growth total) since the 3.22 percentage points sliced from growth in the third quarter of 1982. (For some reason, these data go back even further than that.)

In relative terms, though, the trade effect in 1982 couldn’t have differed more from the situation this year, as during that third quarter, the economy shrank in price-adjusted terms by 1.5 percent on an annual basis.

But those internal numbers!

According to the Commerce Department, exports in the third quarter added up to $2.1667 trillion annualized. But if you actually add the separate goods and services numbers provided, you get a sum of $2.1921 trillion. On the import side, the separate figures add up to a total of $3.2123 trillion, not the reported $3.1775 trillion. Therefore, the quarterly deficit would seem to be $1.0202 trillion, not the $1.0108 trillion presented.

As with the previous discrepancies, although this batch’s aren’t big enough to change the overall picture, they do raise some questions about the reliability of the rest of the data. So I’ll be hoping that the apparent confusion will be cleared up a month from now, when Commerce releases its second estimate for third quarter GDP – but not holding my breath.

(What’s Left of) Our Economy: Some Big Trade News in Today’s GDP Revisions

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constant dollars, current dollars, GDP, gross domestic product, inflation, real GDP, real trade deficit, shutdown, Trade, trade deficit, {What's Left of) Our Economy

And here I thought that the only big surprise in this morning’s U.S. government report on the nation’s economic output (the gross domestic product, or GDP) would come in the annual revisions – which update the data going back to the first quarter of 2015. After all, it’s long been obvious that the second quarter results would be dreadful, due to the CCP Virus-induced shutdown of so much of the U.S. economy.

The revisions were indeed pretty surprising, but the first set of estimates covering the second quarter of this year still contained one entirely (at least to me) unexpected finding: Despite the nearly 38 percent inflation-adjusted sequential crash dive of the economy (at annual rates), the real trade deficit didn’t fall much at all. Indeed, between the first and second quarters, the annualized decrease was only 3.71 percent (from $788 billion at annual rates to $780.7 billion).

The big virus-related effects came during the first quarter, when the annualized quarterly shrinkage was 34.13 percent annualized. Moreover, the price-adjusted trade shortfall had also plummeted by 37.33 percent at an annual rate between the third and fourth quarters of last year, as President Trump’s massive tariffs on China continued to be felt, and tariff front-running – which aimed at avoiding theatened and imposed new levies since the Trump trade wars began, and which inflated import totals over the short-term – subsided.

As for that huge first quarter sequential decrease in the price-adjusted trade deficit, it’s now the biggest such move since the 72.53 percent plunge between the first and second quarters of 2009, when the Great Recession was bottoming.

All the same, the revisions were indeed interesting – and important. For starters, that $788 billion annualized first quarter trade deficit was previously reported as being $815.5 billion. Meanwhile, the $780.7 second quarter after-inflation trade deficit is the country’s smallest quarterly gap since the $792.3 billion figure of the first quarter of 2017.

At least as interesting, the GDP revisions make the Trump administration’s trade record look a good deal better than previously reported, while leaving the results for the last two years of the Obama administration basically unchanged. That’s not obvious from the table below, which shows the old and new constant dollar trade deficit results for the last four full years in billions of dollars:

                 New                    Old

2019:       917.6                  953.9

2018:       877.7                  920.0

2017:       816.8                  858.7

2016:       763.6                  586.3

2015:       719.5                  540.0

But there’s a big problem with these statistics. They’re measuring apples versus oranges. The 2017-19 results have been presented by the Commerce Department in terms of 2012 dollars. The original 2015 and 2016 results, however, (which I found by going through pre-revisions GDP releases) were presented in 2009 dollars, but in their updated versions, they’re presented in 2012 dollars. In other words, the inflation adjustment factor is different. All the same, the Trump deficits, themselves, are notably smaller than they were previously reported.

To permit a legitimate comparison between the two administrations, it’s necessary to drop the inflation adjustment altogether, and present the annual trade deficit results in current (billions of) dollars. That’s what the next table shows:

                 New                   Old

2019:       610.5                 631.9

2018:       609.5                 638.2

2017:       555.5                 578.4

2016:       512.5                 521.2

2015:       526.6                 522.0

All three Trump results are, again, better than previously reported, although the difference is significantly smaller than for the inflation-adjusted figures. For the Obama years, the 2016 results are a little better, but the 2015 results are a little worse.

Even so, there’s still no doubt that the Trump trade deficits are higher than those of the last two Obama years. But as known by RealityChek regulars, sometimes individual data sets like this don’t tell the whole story. And with the trade figures, it’s important to compare them with the size of the whole economy. For this exercise, let’s keep it simple and stick with the new pre-inflation statistics. This table shows the current dollar trade deficit as a percentage of current dollar GDP:

2019:  2.85 percent

2018:  2.96 percent

2017:  2.84 percent

2016:  2.73 percent

2015  2.89 percent

Here a modest edge goes to those two Obama years, at least looking at the average. At the same time, the former President was conducting trade policy business-as-usual. Mr. Trump is conducting a major experiment in disruption that’s bound to create adjustment-related inefficiencies, at least in the short run. That is to say, the full results aren’t in. And a major question looming over the U.S. economy in this election year is how long it will be permitted to continue.

(What’s Left of) Our Economy: Through the Looking Glass With the New US GDP Report?

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CCP Virus, coronavirus, COVID 19, durable goods, exports, GDP, goods, Great Depression, Great Recession, gross domestic product, imports, inflation-adjusted growth, non-durable goods, oil, real GDP, real trade deficit, services, trade deficit, Wuhan virus, {What's Left of) Our Economy

Today’s U.S. government report on the shrinkage of the American gross domestic product (GDP) in the first quarter of the year is fascinating not because it can provide any idea about how bad the CCP Virus-induced economic downturn is right now, much less how bad it will get. Instead, it’s fascinating because it provides (and confirms) some insights on which sectors of the economy have been the biggest winners and losers, and which could fare best and worst going forward.

First, a vitally important explanatory point: When you read that the economy contracted by 4.8 percent between the last three months of 2019 and the first three months of 2020 after factoring in inflation, remember that this figure is an annualized figure. That is, it doesn’t mean that the nation’s output of goods and services (the definition of GDP) fell by that amount all at once during the first quarter. It means that if the contraction that did occur continued at the same pace over the course of a full year, the cumulative drop would add up to 4.8 percent. (NB: The real decline was 4.87 percent, even though the Commerce Department rounded it down to 4.8 for some reason.)

The same cautionary note goes for all the terrifying predictions for the second quarter in particular, to the effect that inflation-adjusted GDP would plummet by 20 percent of 30 percent. They’re annualized rates, too.

No doubt about it – even the new annualized numbers are terrible. (And unless otherwise specified, all the following statistics will represent sequential – i.e., quarter-to-quarter – rates of change.) That’s not because they’re the worst that Americans have seen lately. That dubious honor goes to the fourth quarter of 2008, during the Great Recession, when real GDP sank at an 8.66 percent annual rate. Instead, it’s because the main shutdowns of business didn’t start until mid-March. Since the first quarter ended on March 31, a genuinely appalling amount of damage took place in a very short period of time.

As a result, surely the numbers for the second quarter will be much worse, as the lockdowns themselves spread for weeks thereafter, and their effects have had time to sink in (even though the second quarter figures presumably will reflect some of the cautious easing and reopening that’s begun). Also possibly leading to more depressing future results: Today’s first quarter figures are the first of three reports for the first quarter we’ll be getting this year. As Washington gathers more complete information, the reported nosedive could well get steeper.

The principal ray of hope comes in the nature of the downturn. It was literally ordered by America’s national, state, and local governments. Whatever recession or depression that’s begun says little about the fundamentals of the economy pre-virus – unlike typical recessions, which result from weaknesses in expansions that for various reasons finally come to light, or are brought to light by the Federal Reserve (in many cases) – which in modern times, has reacted to signs of economic excesses (like accelerating inflation), by raising interest rates (that is, increasing the cost of borrowing for everyone) and trying to bring price changes back under control. (And yes, a big exception was the Fed’s record during the previous, so-called Bubble Decade, when its principal aim seemed to be to juice growth at all costs – in that case, at the risk of scary degrees of financial instability.)

All the same, the biological roots of this economic slump create great uncertainties about the rate of recovery, since no one can know how quickly Americans will return to patronizing service sector business in particular, which comprise the vast bulk of the economy, and so many of which largely serve customers in person.

In that vein, it’s more than a little interesting that output in services shrank in the first quarter at a much faster annual rate (10.63 percent) than goods output (1.35 percent). Dig a little deeper, though, and you see that the numbers for goods are sharply divided. After-inflation output of durables (products supposed to last for three years or more either in use or on the shelf – like autos and appliances) plunged by 17.12 percent at annual rates. But constant dollar production of non-durables (notably processed food but also chemicals and paper and textile and plastics and others) actually increased – by 6.77 percent.

Those goods and services figures are contained in the “personal consumption expenditures” category of each GDP report. And overall, such consumption dropped by 7.78 percent annualized in the first quarter. Notably, that’s a much worse result than anything seen during the last, Great, recession (which, by the way, was the previous deepest economic slump experienced in the United States since the Great Depression of the 1930s). During that most recent downturn, personal spending’s decrease bottomed out with a 3.72 percent annualized fall in the fourth quarter of 2008.

No – to get to a worse consumption figure than just recorded, you need to go all the way back to the second quarter of 1980, during a horrible period marked by a painful recession and roaring inflation partly produced by sharp oil price increases. Then, such spending cratered at a 9.01 percent annual rate, and the entire economy shrank by 8.23 percent annualized.

Of course, the American economy entails more than just personal consumption (although, as known by RealityChek regulars, such spending represented a big majority of all economic activity– 69.27 percent of real GDP at present – even after the big decreases in the first quarter). Business investment amounted to 14.03 percent of GDP after inflation, and its levels were off considerably, too, in the first quarter – by 8.92 percent.

No doubt, that’s going to worsen, since the lower personal spending, as well as the lower business spending itself, mean that so many businesses will be short of customers for the time being. Even so, the Great Recession numbers were much worse. From the fourth quarter of 2008 through the second quarter of 2009, this “non-residential fixed investment” tumbled at double-digit quarterly rates, with the bottom coming during the first quarter of 2009 (a 30.14 percent plummet!).

And what about America’s trade performance? The constant dollar trade deficit narrowed by 9.25 percent – from $900.7 billion (again, that’s an annualized figure) to $817.4 billion. That deficit number is the lowest quarterly figure since the $761.4 billion recorded in the fourth quarter of 2016. Yet the rate of decrease was almost matched by that of the fourth quarter of last year (9.03 percent). To find a comparable result, you’d have to go back to the fourth quarter of 2013 (9.24 percent).

One big question: How much of this latest drop was due to oil? We know that the general answer is “a lot” – even though in principle these results take into account (i.e., factor out) the recent crash in oil prices. Nonetheless, a dramatically slowed U.S. economy is going to consume less oil overall (ditto for a recessed global economy, something to ponder since the United States is now an oil exporter). So we’ll need to look at the volume numbers and then compare them with those of previous quarters when the trade deficit dropped significantly for a fuller picture.

What is clear so far, though – in terms of the real overall trade deficit, the first quarter 2020 decline pales before those experienced during the Great Recession. In particular, the real trade gap decreased by 15.08 percent annualized during the first quarter of 2009 and by 18.13 percent during the following quarter.

In line with the consumption findings, moreover, services trade performed worse than (the much greater amount of) goods trade. The goods deficit was 7.39 percent narrower in the first quarter of 2020 ($0.9995 trillion annualized) than during the fourth quarter of 2019 ($1.0792 trillion annualized). But the services surplus rose by only 2.07 percent (from $188.2 billion annualized to $192.1 billion).

Especially revealing were the import and export findings. For goods, exports were off by only 0.30 percent – from $1.7823 trillion annualized to $1.7769 trillion. But for services, they dropped by 5.85 percent (from $758.6 billion annualized to $714.2 billion).

The services export and imports decreases were the biggest on record – by far. And although figures only go back to the first quarter of 2002, can anyone seriously doubt that these results reflect the numerous international travel bans sparked by the United States – and so many other countries?

Because services play such a predominant role in the economy, and because services that need to be delivered in person, like dining out and travel, represent such big shares of the economy (just short of 3.25 percent of all private sector output for restaurants, bars, and lodging places alone as of late 2019, and a much bigger 11.06 percent of the private sector workforce), it seems reasonable at this point to expect these sectors to keep taking particularly powerful blows at least as long as the virus remains a pandemic.   

(What’s Left of) Our Economy: New GDP Data Show a Trade Deficit Being Brought to Heel Under Trump

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Barack Obama, GDP, gross domestic product, Made in Washington trade deficit, real GDP, real trade deficit, trade deficit, Trump, {What's Left of) Our Economy

The fourth quarter (and therefore full-year) 2019 U.S. economic growth statistics are now in, and they’re chock full of results showing that President Trump’s promise to strengthen the American economy in part by reducing the trade deficit is being fulfilled.

To be sure, this conclusion needs several important qualifications. Notably, today’s report on the gross domestic product (GDP) from the Commerce Department is preliminary. It’ll be revised twice in the next two months alone. Further, the trade data the report contains aren’t all shaped by government trade policy decisions alone. For the numbers include the flows of services and oil trade, which are rarely dealt with in trade agreements or similar trade-related measures.

Even so, the new figures entitle the President and his supporters to take at least a slow, or partial, victory lap.

In the first place, the pre-inflation GDP data show that the overall U.S. trade deficit did indeed fall in 2019. The annual decline wasn’t much – 0.97 percent. But it marked the first yearly decrease in this number since 2016’s 0.19 percent. And it looks even better in the proper context – i.e., seen against the backdrop of changes in the GDP themselves.

After all, trade deficits often (but not always) fall for bad reasons – specifically, a shrinkage in America’s output that slashes the economy’s demand for foreign goods and services. That, however, wasn’t the story in 2019. Although the trade gap narrowed slightly, the overall economy expanded by 4.12 percent. That’s considerably faster than in 2016, when growth was only 2.69 percent. And remember – the trade deficit decrease was faster.

When examined after factoring in inflation (the GDP numbers most closely followed by students of the economy), the results don’t endorse the Trump trade approach quite so strongly. But they’re unmistakably encouraging.

In these real terms, the trade deficit rose by 3.72 percent last year (from $920 billion to $954.2 billion). This increase, however, was the slowest annual increase since 2013 (when the gap actually shrank by 6.30 percent). Even better, real economic growth in 2019 still totaled 2.33 percent. In 2013, it was only 1.84 percent.

Those results still don’t look like great news for backers of the President’s trade policy, for they indicate that making significant progress in lowering the trade deficit was at least associated with a very sluggish economy.

Yet if you take a longer view, and recognize that longstanding trends in an economy as gigantic as America’s don’t turn around overnight, the picture looks more encouraging.

The table below shows the relationship in recent years between the annual change in after-inflation (“real”) GDP and the annual change in the real trade deficit. The year 2011 is the chosen baseline because that’s when the current economic recovery settled into a reasonably normal state following the unusually deep dive it took during the Great Recession and the not surprisingly strong rebound it enjoyed during the subsequent expansion’s early stages. Low deficit-growth-to-economic growth ratios identify years during which the constant dollar GDP was able to expand without a major widening of the trade gap, and high ratios reveal the opposite situation. (Negative ratios demonstrate an economy that grew while the trade shortfall actually shrank.)

Another way to think of the matter: When the economy grows faster than or just about as fast as the trade deficit, it’s making progress toward self-sufficiency – a goal that most economists disdain (at best), which that arguably is better for the nation than growth strongly dependent on a still-dangerous and/or slow-growing world. And when the growth of the trade deficit is compared with economic growth, it’s clear that the Trump administration has made major headway on this score.

ama years                      real GDP growth   real trade deficit growth       ratio 

10-11:                              1.55 percent               0.83 percent                 0.54:1

11-12:                              2.25 percent               0.01 percent                 0.04:1

12-13:                              1.84 percent             -6.30 percent                -3.42:1

13-14:                              2.53 percent              8.33 percent                 3.29:1

14-15:                              2.91 percent            25.01 percent                 8.59:1

15-16:                              1.64 percent              8.61 percent                5:25:1

Trump years

16-17:                             2.37 percent              8.43 percent                3.57:1

17-18:                             2.93 percent              8.26 percent               2.82:1

18-19:                             2.33 percent              3.72 percent               1.60:1

Under the Obama administration, for three years, the economy managed to grow in after-inflation terms while the after-inflation trade deficit fell overall. Unfortunately, the growth itself was unimpressive. During its last three years, GDP expanded faster (especially in 2014 and 2015). But the trade deficit rose considerably faster still. So the U.S. economy became more dependent on that dicey world.

During the three full Trump years, the economy’s growth rate has been a bit stronger than under the last three Obama years. But the growth rate of the trade deficit has been a good deal slower. And although the overall economic growth rate has slowed slightly overall between 2017 and 2019, the growth rate of the trade deficit has been more than halved.

Similar trends are apparent from examining a different measure – the real trade deficit as a share of the gross domestic product. As shown by the table below, notable progress was made during the first three Obama years below in reducing both that actual percentage, its growth rate, and the ratio between the economy’s inflation-adjusted growth and the growth of its inflation-adjusted trade shortfall as a share of GDP.

During the next three Obama years, these trends generally shifted into reverse. But although the inflation-adjusted trade deficit as a share of real GDP has continually risen during the first Trump years, its own growth rate has weakened significantly even as growth itself has remained solid and impressive compared with the growth rates of those three final Obama years.

                       real trade deficit/GDP   real GDP   real trade deficit      ratio   

Obama years

2011:                   3.59 percent          1.55 percent     -1.10 percent     -0.71:1

2012:                   3.51 percent          2.25 percent     -2.23 percent     -0.99:1

2013:                   3.23 percent          1.84 percent     -7.98 percent     -4.34:1

2014:                   3.41 percent          2.53 percent      5.57 percent      2.20:1

2015:                   4.15 percent          2.91 percent    21.70 percent      7.46:1

2016:                   4.43 percent          1.64 percent      6.75 percent      4.12:1

Trump years

2017:                  4.69 percent          2.37 percent      5.87 percent      2.48:1

2018:                  4.94 percent          2.93 percent      5.33 percent      1.82:1

2019:                  5.00 percent          2.33 percent      1.21 percent      0.52:1

Unfortunately, we’ll have to wait a few days to judge how the Trump administration has performed in terms of loosening the link between economic growth and that portion of the trade deficit most directly affected by trade policy. I call it the Made in Washington trade deficit, and as stated above, it consists of the total deficit minus trade in services and oil. Here’s how those figures luck (including the inflation-adjusted Made in Washington deficit).

Obama years        real GDP       real Made in Washington deficit      ratio 

10-11:                1.55 percent                 11.92 percent                      7.69:1

11-12:                2.25 percent                 10.23 percent                      4.55:1

12-13:                1.84 percent                   6.15 percent                      3.34:1

13-14:                2.53 percent                 15.85 percent                      6.26:1

14-15:               2.91 percent                  22.70 percent                     7.80:1

15-16:               1.64 percent                    2.54 percent                     1.55:1

Trump years

16-17:              2.37 percent                    6.64 percent                     2.80:1

17-18:              2.93 percent                  13.15 percent                     4.49:1

18-19:              2.33 percent                    4.54 percent*                   1.95:1

*November-to-November

It’s evident from here that the portion of the trade deficit most directly affected by trade policy has grown much slower during the Trump years than during the Obama years, even though Trump growth on average has been somewhat stronger. In fact, during the only two Obama years in which that Made in Washington trade deficit increased nearly as slowly as during any of the Trump years (2013 and 2016) were years in which that growth was weak (less than two percent). Annual economic growth during the Trump years has never sunk to that level, or even close.

So no one should imagine that, even by its own standards, the Trump administration has made nearly enough progress in either reducing the trade deficit, or increasing the economy’s self-sufficiency. But although the numbers themselves say nothing about the value or dangers of greater self-reliance, they make clear that it’s happening, and that much of the progress has taken place where trade policy matters most.

(What’s Left of) Our Economy: The Crucial Trade War Message of the New U.S. Economic Growth Report

Tags

Boeing, business investment, capex, exports, GDP, gross domestic product, imports, inflation-adjusted growth, non-residential fixed investment, real GDP, real trade deficit, services trade, Trade, trade deficit, {What's Left of) Our Economy

Everyone hoping for the U.S. economy to perform well had to be cheered by this morning’s look at economic growth in the third quarter – the second of three such reports on the time period for the near future. And special bonus: The results significantly strengthen the case that the United States can absorb hits from even a long China trade conflict with room to spare.       

On top of beating expectations on its headline figure (which showed 2.11 percent annualized inflation-adjusted growth for July through September), a key internal indicator showed unexpectedly showed improvement as well – business investment.

What companies spend on plant, equipment, computers, research and development and the like is always closely watched because increases on these scores are (rightly) deemed the healthiest source of growth and better living standards. More recently, it’s been (rightly) seen as a test of the Trump tax cuts (which were mainly aimed encouraging such expenditures) as well as (less clearly) of the Trump trade policies (because of how they’re supposedly paralyzing corporate executives with uncertainty). And the results so far this year on the “capex” (capital – or business – spending) front certainly have been worse than last year’s excellent performance.

According to the new GDP report, real “non-residential fixed investment” still declined sequentially for the second straight quarter. But the decline was less (0.67 percent) than first estimated (0.75 percent). At the same time, pessimists could point out that the second quarter’s dip was considerably smaller (0.26 percent), so it remains far from clear that this valued growth engine is out of the woods.

Superficially, the trade results as such of the new GDP read looked poor as well, as the after-inflation overall deficit hit a new record. At an annualized $988.3 billion, it bested the previous all-time high of 983.0 billion of last year’s fourth quarter, and the $986.4 billion figure from last month’s first estimate of third quarter growth.

Think a bit, though, and the impact of Boeing’s aircraft safety woes represent a big part of the explanation – and a big part that can’t be blamed on President Trump’s tariffs-heavy trade policies. And even given the near halt in orders of its popular but troubled 737 Max model, the new numbers for total after-inflation total U.S. exports were slightly higher than those of the third quarter’s first read ($2.5231 trillion annualized versus $2.5222 trillion) and those of the second quarter ($2.5175 trillion).

Moreover, the “Boeing effect” apparently will need to be kept in mind a good deal longer, as suggested by this new report of major problems with another popular model.

Nevertheless, even constant-dollar merchandise (goods) exports keep trending up. True, at $1.7842 trillion annualized as of this morning, they remain less than the quarterly record of $1.8141 trillion, set in the second quarter of last year. But the new results exceeded those both for the second quarter ($1.753 trillion) and for the third quarter’s initial estimate ($1.7823 trillion).

Further, some more of the recent weakness in U.S. trade accounts looks attributable to another sector of the economy that has little or nothing to do with the trade wars, either – at least not directly, in the sense of provoking retaliatory tariffs. That’s America’s services trade.

The new GDP report’s statistics on these trade flows were worse than those of the second quarter and of the first third quarter estimates both on the exports side and on the imports side. Indeed, price-adjusted services exports fell deeper into worst-since-the-second-quarter-of-2017 territory (coming in at $745.7 billion annualized versus the earlier number of $740.7 billion. And at $563.5 billion, real services imports rose higher into all-time record territory (with the second worst such total being the $558.1 billion during the first quarter of this year).

Since President Trump has blown so hot and cold on his China tariffs – and shows signs of doing the same on threatened separate automotive tariffs – Washington-related trade developments seem likely to keep distorting the GDP figures (including by inhibiting some business investment) and the trade figures for the foreseeable future no matter what happens with Boeing or U.S. services industries.

At the same time, the new GDP report underscores a point often lost in the understandable and volatile flood of headlines and forecasts: Even though changing the fundamental course of American trade policy is a thoroughly disruptive undertaking, with transition-related efficiency-reducing adjustments inevitable, the U.S. economy looks to be passing this test, including with China, pretty handily.  Better still:  Modest signs of further improvement are visible. In other words, and especially considering the failure of pre-Trump approaches, there’s here’s every reason for the President to stay his new course on trade.

And one more point:  If we don’t communicate before, Happy Thanksgiving to you and yours!

(What’s Left of) Our Economy: US Growth Remains Solid Despite a Notable Boeing Drag

Tags

Boeing, exports, GDP, General Motors strike, goods, gross domestic product, imports, real GDP, real trade deficit, services, Trade, trade deficit, {What's Left of) Our Economy

This morning’s first official read on U.S. economic growth in the third quarter not only beat expectations. Inflation-adjusted gross domestic product (GDP) expanded nicely despite potholes dug by the General Motors strike and Boeing’s ongoing safety woes.

Bad news wasn’t entirely absent, especially from a trade policy standpoint, as the overall U.S. trade gap edged up to a new record in absolute terms. But even here, mitigating circumstances can be cited – namely, foreign reluctance to purchase Boeing planes, which surely weighed on exports, and tariff front-running sparked by importers’ desire to buy products from China in particular to beat the imposition of threatened tariffs.

The third quarter’s 1.91 percent annualized increase in real GDP – the first of three near-term growth figures that will be issued – handily surpassed the latest 1.6 percent consensus of the forecasts tracked by CNBC and Moody’s Analytics. Moreover, the Boeing effect looks anything but negligible. As noted by Harvard University economist Megan Greene, the Trump administration believes that the aerospace giant’s troubles cut 0.40 percentage points from third quarter GDP, and private sector economists peg the cost at 0.25 percentage points.

The real trade deficit, however, was clearly no help. It wasn’t nearly as big a drag on inflation-adjusted growth as in the second quarter (when it subtracted 0.68 percentage points from that two percent annualized constant dollar expansion). But it still depressed the third quarter’s real growth by 0.08 percentage points – and edged up by 0.58 percent to a new record $986.4 billion on an annual basis. (The previous all-time high was the $983.0 billion level reached in the fourth quarter of 2018).

This after-inflation trade deficit as a share of the entire economy stayed virtually unchanged from quarter to quarter – at 5.16 percent. But these are the kinds of levels that haven’t been seen since late during the last, bubble-decade expansion (in the third quarter of 2007). Their only saving grace is that they’re still well off the current record of 6.10 percent of GDP, also set during that bubble decade (in the third quarter of 2005).  Nonetheless, the Boeing effect shouldn’t be discounted here, either, as demonstrated in my recent RealityChek post. 

As for other trade-related highlights of the new GDP report:

>Total annualized real exports increased by 0.19 percent, from $2.5175 trillion in the second quarter to $2.5222 trillion.

>Inflation-adjusted goods exports rose at a somewhat faster rate – 0.39 percent sequentially, from $1.7753 trillion to $1.7823 trillion.

>Constant dollar services exports fell on-quarter for the second straight quarter – from $748 billion annualized to $746.3 billion. That total was their lowest since the second quarter of 2017’s $740.7 billion.

>Combined after-inflation goods and services imports were up by 0.29 percent, from $3.4982 trillion annualized to $3.5085 trillion – the second highest total on record after the $3.5116 trillion record in the fourth quarter of 2018.

>Constant dollar goods imports inched up by 0.11 percent sequentially, from $2.9417 trillion annualized to $2.9450 trillion.

>Inflation-adjusted services imports rose quarter to quarter from $557.2 billion annualized to $563.2 billion. That total represents a new record, surpassing the previous all-time high of $558.1 billion set in the first quarter of this year.

(What’s Left of) Our Economy: Healthier U.S. Growth is Continuing, at Least Trade-Wise

Tags

exports, GDP, gross domestic product, imports, inflation-adjusted growth, Obama, real GDP, real growth, real trade deficit, trade deficit, Trump, {What's Left of) Our Economy

Since we’re clearly well into the 2020 presidential campaign, comparisons understandably have begun to be made by political and even economic types between President Trump’s economic record and that of his White House predecessor, Barack Obama.

In that vein, today’s new official U.S. figures on economic growth contain some good news for Mr. Trump, his supporters – and in fact for Americans collectively:  Even though they confirm that the nation’s growth this year is indeed slowing, and the trade deficit targeted for reduction by the President is going up, the latest numbers on the gross domestic product (GDP) also show that inflation-adjusted growth (the growth figure most closely followed) during the Trump years is still less closely associated with trade deficit increases than under Obama. In other words, by one important measure, the economy’s expansion is healthier – more of it is being generated by producing goods and services at home, instead of consuming imported goods and services.

The new numbers – which are the first of two sets of revisions for the second quarter of the year that will be released this year – don’t indicate progress at first glance. The real trade deficit, originally reported at $978.7 billion on an annualized basis, is now judged to have been $982.5 billion. That’s just a bit less than the record $983 billion figure that was hit in the fourth quarter of last year.

Moreover, total exports were revised down ($2.5205 trillion annualized to $2.5165 trillion annualized). Total imports were less than first reported as well, but only by a hair – $3.4990 trillion rather than $3.4992 trillion. And worse, quarter-to-quarter after-inflation total exports are now off by 1.48 percent, and after-inflation total imports are up 0.02 percent. Indeed, that real export fall-off was the biggest quarterly decrease since the depths of the last recession – when they cratered by 8.08 percent in the first quarter of 2009.

But despite this seeming backsliding, the Trump record has been much more impressive when examined in the context of economic growth. This conclusion emerges by examining how fast the economy has increased in constant dollar terms versus how fast the trade deficit has widened under the two administrations. Here are the calendar year annual rates of change for each, followed by the ratio between the two:

Obama years

                        real GDP       real trade deficit      deficit growth to GDP growth

09-10:          2.56 percent       16.73 percent                        6.54:1

10-11:          1.55 percent         0.39 percent                        0.25:1

11-12:          2.25 percent        -0.09 percent                      -0.04:1

12-13:          1.84 percent        -6.30 percent                      -3.42:1

13-14:         2.53 percent          8.33 percent                        3.29:1

14-15:         2.91 percent        25.02 percent                        8.60:1

15-16:         1.69 percent          8.61 percent                        5:09:1

Trump years

16-17:        2.37 percent          8.43 percent                        3.56:1

17-18:        2.93 percent          8.37 percent                        2.86:1

These tables show that only once during the Obama years (2013-14) did the economy grow at Trump-like rates while keeping real trade deficit growth within modest Trump-like ranges.  And although the that real trade deficit did shrink in absolute terms in two of the Obama years (2011-12 and 2012-13), economic growth during those two years were subpar. 

Moreover, the 2017-18 Trump results were distorted by major tariff front-running – the rush by importers to get their goods into the United States before announced tariffs raised their prices.

In addition, although 2019 isn’t yet finished, the Trump ratios so far look relatively good as well – especially for the first quarter.

                           real GDP     real trade deficit      deficit growth to GDP growth

4Q18-1Q19:    3.06 percent    -3.97 percent                        -1.30:1

1Q19-2Q19:    2.02 percent     4.07 percent                          2.01:1

The Trump record looks better still when presented on a rolling four quarters basis. This time the frame of reference will be a little different. We’ll focus on the high growth Obama period through the end of that administration, and compare it with the high growth Trump period through the present.

Obama years

                          real GDP        real trade deficit      deficit growth to GDP growth

1Q14-1Q15:   3.98 percent       26.68 percent                       6.70:1

2Q14-2Q15:   3.35 percent       21.34 percent                       6.37:1

3Q14-3Q15    2.44 percent       30.60 percent                     12.54:1

4Q14-4Q15:   1.90 percent       21.83 percent                     11.49:1

1Q15-1Q16:   1.62 percent       11.72 percent                       7.23:1

2Q15-2Q16:   1.34 percent         9.59 percent                      7.16:1

3Q15-3Q16:   1.56 percent         2.42 percent                      1.55:1

4Q15-4Q16:   2.03 percent       10.87 percent                      5.35:1

1Q16-1Q17:   2.10 percent         6.92 percent                      3.30:1

Trump years

4Q16-4Q17:   2.80 percent         5.90 percent                      2.11:1

1Q17-1Q18:   2.86 percent         6.34 percent                      2.22:1

2Q17-2Q18:   3.20 percent         0.06 percent                      0.19:1

3Q17-3Q18:   3.13 percent       15.44 percent                      4.93:1

4Q17-4Q18    2.52 percent       11.22 percent                      4.45:1

1Q18-1Q19:   2.65 percent         6.76 percent                     2.55:1

2Q18-2Q19:   2.28 percent       15.52 percent                     6.81:1

Again, under the Trump administration, the economy has managed to expand healthily in real terms while keeping the trade deficit’s increase under control much more often than under the Obama administration. Although the third and fourth quarter figures look like they undermine this case, in fact, they clearly demonstrate the impact of tariff front-running.  The only genuine fly in the Trump ointment so far: that final set of figures, when the price-adjusted trade deficit rose 6.81 times faster than the economy grew in those terms, while the rate of overall growth declined. And unfortunately, when it comes to analyzing these trends going forward, because of Mr. Trump’s new tariff announcements, front-running is likely to continue for the time being.

Even with this tariff front-running – and especially if the front-running doesn’t throw off the figures excessively – an economy growing faster relative to its trade deficit isn’t the sexiest economic achievement to brag about. But is it completely unreasonable to think that a supposed master-brander and pitchman like President Trump can’t rise to the challenge?

(What’s Left of) Our Economy: Those New GDP Numbers Keep Showing Healthier Trade-Related Growth Progress Under Trump

Tags

debt, GDP, gross domestic product, inflation-adjusted growth, real GDP, real trade deficit, recession, recovery, Trade, trade deficit, {What's Left of) Our Economy

So much data were released yesterday morning on the U.S. economy’s growth rate – not only the initial read on the second quarter of this year, but revisions going back to 2014 – that it’s impossible to explore all the results and their implications in one post. As a result, I’ll focus today on the main messages being sent by how the tariff-centric Trump trade policies are affecting growth.

In a nutshell, the big takeaway for me was that, despite the sizable increase in the inflation-adjusted trade deficit in the second quarter of this year (to an annualized total of $978.70 billion – the second biggest ever, after the $983 billion mark hit in the fourth quarter of last year), the economy kept indicating that it can grow – and pretty strongly – without racking up big increases in trade gap. In other words, the United States is regaining the ability to expand at acceptable rates without getting deeper into hock. 

Still, there’s a major uncertainty hovering over these results: Signs continue that they’re being distorted by what’s called tariff front-running (accelerating purchases of imports in order to avoid announced or threatened duties), and the consequent effects on building and reducing business inventories. And since tariff threats hang over not only hundreds of billions of dollars of goods imports from China, but rhetorically anyway over automotive imports from all over the world, import and inventory levels could well remain volatile. Moreover, don’t forget the potential effect on exports: If President Trump carries through with tariff threats, foreign economies are likely to impose retaliatory levies on American goods, and curb these sales.

So far, though, so good.

As in recent reports on trade and the gross domestic product (or GDP – what economists define as “the economy”), this post will compare the economy’s growth rate with the growth rate of the trade deficit during two recent similar periods of time – the statistical year (e.g., four straight quarters) during which growth was fastest when former President Barack Obama was in office, and the statistical year during which growth has been fastest so far during President Trump’s administration.

Even with the latest revisions, the fastest statistical Obama growth year was between the second quarter of 2014 and the second quarter of 2015. Adjusted for inflation (the most closely followed GDP measure), the economy grew by 3.35 percent over those four quarters – just a little less than the 3.37 percent previously estimated. And during that period, the real trade deficit rose by 21.34 percent (a little more slowly than the 21.55 percent previously estimated).

Before today’s revisions, the fastest Trump era growth stretch took place between the first quarter of 2017 and the first quarter of 2018. But that 3.18 percent after inflation growth has now been downgraded all the way down to 2.65 percent. But growth between the second quarters of 2017 and 2018 has been revised up – to 3.20 percent. So there’s a new Trump growth champ.

But even though the Trump growth spurt has been only a little slower than its Obama counterpart, the story with the trade deficit was strikingly different. For during the Trump spurt, the gap widened by only 6.34 percent. That’s less than a third as fast as under Obama.

In other words, constant dollar growth under President Trump has taken place while piling up much less debt than similar growth during the Obama years. And growth that’s less reliant on debt is growth that’s a lot healthier and more sustainable.

Trump-era growth looks all the more sustainable upon realizing that during Mr. Trump’s administration so far, robust growth (at least by recent standards) has been much more self-reliant than during the Obama administration – at least until very recently. The table below shows the annual (calendar year, from fourth quarter to fourth quarter) real growth rates during the Obama and Trump presidencies starting in 2010 (the first full calendar yer of the current economic recovery); the growth rate of the after-inflation trade deficits, and the ratios between these two figures for each year:

Obama yrs          real GDP       real trade deficit      deficit growth to GDP growth

10-11:              1.61 percent       0.85 percent                         0.53:1

11-12:              1.47 percent      -0.92 percent                       -0.63:1

12-13:              2.61 percent     -8.89 percent                       -3.41:1

13-14:              2.88 percent    23.36 percent                        8.11:1

14-15:              1.90 percent    21.83 percent                      13.07:1

15-16:              2.03 percent    10.87 percent                       5:35:1

Trump years

16-17:             2.80 percent      5.90 percent                       2.11:1

17-18:             2.52 percent    11.22 percent                       4.45:1

The table shows that only once (between 2012 and 2013) did the Obama-era economy display any ability to grow faster than the humdrum rate of two percent with the trade deficit’s growth restrained. (In fact, it shrunk significantly.) Once growth accelerated (the following year), the trade shortfall exploded, and its rate of increase, along with those ratios, stayed high even as growth itself cooled notably.

Moreover, without pronounced tariff front-running, the 2017-18 Trump trade deficit figure and the resulting ratio both would likely have been much lower. And economic growth looks even more self-reliant, and therefore healthier, so far this year, as the follo  wing table shows:

                               real GDP      real trade deficit     deficit growth to GDP growth

4Q 18-1Q 19:       3.06 percent    -3.97 percent                       -1.30:1

1Q 19-2Q 19:       2.04 percent     3.68 percent                         1.80:1

The Trump record looks even better when presented on a rolling four quarters basis, starting with that peak Obama growth period between the second quarter of 2014 and the second quarter of 2015, and ending with the last such period – between the second quarter of 2018 and the second quarter of 2019:

                              real GDP      real trade deficit      deficit growth to GDP growth

2Q 14-2Q 15:    3.35 percent      21.34 percent                       6.37:1

3Q 14-3Q 15:    2.44 percent      30.60 percent                     12.54:1

4Q 14-4Q 15:    1.90 percent      21.83 percent                     11.49:1

1Q 15-1Q 16:    1.62 percent      11.72 percent                       7.23:1

2Q 15-2Q 16:    1.34 percent        9.59 percent                       7.16:1

3Q 15-3Q 16:    1.56 percent        2.42 percent                       1.55:1

4Q 15-4Q16:     2.03 percent     10.87 percent                        5.35:1

1Q 16-1Q 17:    2.10 percent       6.92 percent                        3.30:1

Trump

2Q 16-2Q 17:    2.16 percent    11.71 percent                        5.42:1

3Q 16-3Q 17:    2.42 percent      9.50 percent                       3.93:1

4Q 16-4Q 17:    2.80 percent     5.90 percent                        2.11:1

1Q 17-1Q 18:    2.86 percent     6.34 percent                       2.22:1

2Q 17-2Q 18:    3.20 percent     0.06 percent                       0.19:1

3Q 17-3Q 18:    3.13 percent   15.44 percent                      4.93:1

4Q 17-4Q 18:    2.52 percent   11.22 percent                      4.45:1

1Q 18-1Q 19:    2.65 percent     6.76 percent                      2.55:1

2Q 18-2Q 19:    2.29 percent   15.07 percent                      6.58:1

Though the figures fluctuate significantly, the difference under two different presidents at roughly the same phase of the same economic expansion is at least as significant. To start, the only time that annual real growth under Obama topped three percent during this stretch, the inflation-adjusted trade deficit soared 6.37 times faster. Under Trump, the economy has enjoyed two such periods. During the first, the real trade deficit barely budged. During the second, it rose 4.93 times faster than the economy.

During these Obama years, the after-inflation trade deficit’s annual growth rate slipped under ten percent three times. Real annual GDP growth never bested 2.10 percent during any of them. During the Trump years, sub-ten percent annual growth for the real trade deficit has occurred five times. Real annual GDP increased during those years at rates between 2.42 percent and 3.20 percent. The worst Obama ratio has been 12.54 percent. The worst Trump ratio has been 6.58 percent (coming during the most recent statistical year, and possibly indicating tariff front-running). 

Has President Trump managed to reduce the U.S. trade deficit as such, or made the U.S. economy, and especially strong growth, completely self-sufficient, and therefore free of debt dependence (in terms of parts of the economy where this is feasible, as opposed to, say, tropical fruit)? Of course not. The nearly $20 trillion American economy is obviously a supertanker that isn’t turned around easily or quickly. But it’s clear that whereas the United States was moving ever further from those goals before Mr. Trump was inaugurated, it’s now moving closer. Just as clear: If the President stays the course on tariffs (much less increase and/or broaden them), progress will likely continue.      

(What’s Left of) Our Economy: The New GDP Report Confirmed the Good News Trump Trade Story

Tags

GDP, gross domestic product, inflation-adjusted growth, real GDP, real growth, real trade deficit, tariffs, Trade, trade deficit, Trump, {What's Left of) Our Economy

The U.S. government’s second look at the gross domestic product (GDP) for the first quarter of the year, which came out yesterday, didn’t significantly change the message sent by last month’s initial read on the economic impact of President Trump’s tariff-centric trade policies so far – and that’s good news for anyone who’s not afflicted with Trump Derangement Syndrome. (Actually, if extreme Never Trump-ers’ well-being is tied to the American economy’s, it’s good news for them, too, in real life.)

This newest look provides yet more evidence that Mr. Trump’s long overdue overhaul of the nation’s approach to trade – no doubt coupled with other measures like regulatory reform and possibly the tax cuts – is enabling the economy to grow in a healthy, sustainable way. Specifically, the economy’s overall inflation-adjusted growth (the measure that attracts the most attention) has not only been strong. It’s become stronger than the growth of America’s still oversized, debt-producing trade deficits.

The quarter-to-quarter results show this trend emphatically. According to the second GDP read, the economy grew at a price-adjusted annual rate of 3.03 percent in the first quarter of this year. That’s down only slightly from the 3.13 percent real growth previously reported, and considerably faster than the 2.15 percent results for the fourth quarter of last year.

But during that first quarter, the after-inflation overall trade deficit dropped by 5.45 percent. That’s a bit less than the 5.90 percent sequential drop found in the last month’s GDP report (because the trade shortfall was revised slightly higher), but still considerable given the rapid overall expansion. And it’s a major turnaround from the 0.63 constant dollar trade deficit increase between the third and fourth quarters of last year.

All the same, one quarter does not a trend make. That’s why it’s crucial to note that developments over longer time-frames also support optimism about the Trump trade policies’ results. And as previously shown, the most revealing comparison is between the last high growth period recorded by the economy during President Obama’s administration, and the current Trump surge.

Despite the marginal reduction in the first quarter’s real growth figure, it still leaves after-inflation expansion over the last four data quarters at 3.18 percent. That’s the fastest such growth since the 3.37 percent recorded between the second quarter of 2014 and the second quarter of 2015.

But during that Obama-era growth spurt, the real U.S. trade deficit increased by 21.55 percent. During the current Trump high growth period, this trade gap is up only 0.13 percent so far.

Some other trade-related highlights of the new read on first quarter GDP:

>In absolute terms, the inflation-adjusted overall trade deficit for the first quarter was revised up from $899.3 billion to $903.6 billion. That’s the lowest level since the second quarter, 2018’s $841.0 billion.

>Consequently, the real trade deficit as a share of price-adjusted GDP stood at 4.78 percent, not the 4.76 percent reported in the advance GDP release. That’s still the lowest such number since the second quarter of 2018’s 4.54 percent.

>Trade’s contribution to economic growth in the first quarter remained at its best level in years. In the advance read, the sequential shrinkage of the constant-dollar trade deficit fueled 1.03 percentage points of 3.13 percent annualized growth. As of the new GDP report, these figures stood at 0.96 percentage points of 2.03 percent growth.

In other words, the trade deficit’s improvement accounted for 31.64 percent of the first quarter’s real growth. That’s down from the 32.91 percent figure from the initial read on first quarter GDP, but still the highest such figure since 38.56 percent of the fourth quarter of 2013 (when a reduction in the inflation-adjusted trade deficit fueled 1.23 percentage points of its 3.19 percent annualized growth.

>Because total goods and services exports were revised slightly higher (from $2.5765 trillion annualized to $2.5836 trillion), they remained at record levels.

>Real goods exports exports were estimated to be slightly higher, too – $1.8028 trillion annualized instead of $1.7598 trillion. But that’s still only the second best total on record (after the $1.8092 trillion in the second quarter of 2018).

>After-inflation services exports were also upgraded slightly – from $783.2 billion annualized to $783.6 billion. That still represents their fifth straight quarterly record.

>First quarter constant dollar total imports are still estimated to have fallen sequentially in the first quarter, but only to $3.4871 trillion annualized, not to $3.4758 trillion. That upward revision still left them as representing the third highest level on record.

>The same story unfolded for after-inflation goods imports. Their quarterly drop left them at $2.9229 trillion annualized, not $2.9131 trillion – also a third all-time highest level.

>Real services imports, however, came in higher than the $562.2 billion at annual rates previously reported. The new $563.8 billion total represented a new record.