October 2017 Trade Balance

America’s trade deficit worsened as the fourth quarter of 2017 got underway.  According to the Bureau of Economic Analysis, our nation’s trading shortfall reached $48.7 billion, up from the downwardly revised chasm of $44.9 billion in September (originally $43.5 billion).  In short, the two components of trade (imports and exports) moved in opposite directions.

Exports fell marginally during the period.  Declining less than $100 million, our nation sold goods and services totaling $195.9 billion in October.  Exports of goods decreased $300 million as food, feeds, and beverages fell $1.3 billion.  Equipment sales also suffered as capital goods exports dropped $1.2 billion.  Fortunately, industrial supplies and materials made up for some of the other declines by increasing $2.6 billion.  Service exports managed to gain nearly $300 million, mostly offsetting the deterioration in the goods tally.

Imports jumped $3.8 billion to $244.6 billion as the fourth quarter started.  On this side of the ledger, industrial supplies increased $1.8 billion, while other goods improved by $1.1 billion, and consumer goods (led by cell phones) increased $800 million.  Service imports also rose during October, gaining $300 million for a total of $45.2 billion. 

America’s trade deficit continues trending toward wider gaps.  During the three months ending in October, the gap averaged an increase of $5.1 billion.  This trend is probably partially symptomatic of America’s economy being healthier than that of many other nations.  Ironically, this growing trade imbalance hurts the gross domestic product (GDP) statistic because it subtracts from the other components of output.  Hopefully, domestic demand for domestic goods and services is growing faster than the trade deficit, allowing for an accelerating output tally despite these deteriorating trade figures.