February 2018 Balance of Trade

America’s trade deficit deepened in February 2018 according to the latest data from the Bureau of Economic Analysis.  Our nation’s trade balance reached minus $57.6 billion, worsening from the downwardly revised count of minus $57.6 billion (originally minus $56.6 billion).  Year-to-date, the trade deficit increased $21.1 billion or 22.7 percent versus the same period last year.

Both the goods deficit and services surplus worsened in the period. America’s goods gap widened 0.4 percent or $300 million to $77.0 billion.  Even worse, the services surfeit declined 3.1 percent or $600 million to just $19.4 billion.  However, this might not represent such a dour picture.  Both imports and exports of goods increased; it is just that imports increased faster, causing the deficit to grow.  Likewise, imports and exports of services improved in a similar fashion as Americans increased their purchases of foreign services much faster than our trading partners increased their intake of American services

Patriotism could be to blame on the services side.  In particular, payments for the rights to broadcast the 2018 Winter Olympics caused a large increase in America’s use of foreign intellectual property.  I know curling was on nearly every day at my house!

February’s shortfall feels less menacing after diving deeper into the report.  Of course, it will still weigh on the gross domestic product (GDP) tally due out later this month since net exports (which are negative) get added to the other components of output.  Fortunately, the Olympics should not have much impact on this indicator for a few more years.  Services should get a bit of a bounce in the March report.  Going forward, releases of the trade balance will not include the noise of "Bugler’s Dream.”