Submitted by Atlas Indicators Investment Advisors on December 10th, 2018
America’s trade deficit continued growing in October 2018 according to data from the Bureau of Economic Analysis. The most recent deficit grew to $55.5 billion from the upwardly revised count of $54.6 (originally $54.0 billion). In the period, exports declined $300 million while imports increased $600 million, causing the shortfall to reach a 10-year high.
Goods really hurt the total as their trade chasm reached a record of $78.1 billion (data goes back to 1992). Exports were particularly weak in the period. Foods, feeds, and beverage exports collapsed 6.1 percent in the period are now 2.1 percent lower than a year earlier. Auto exports sank 1.8 percent, and non-auto capital declined 1.1 percent. Fortunately, not all export categories fell; consumer goods and industrial supplies rose. However, imports rose marginally, rising 0.2 percent which put added pressure on the trade gap.
Our goods shortfall with China reached a near record level. The only time it has been higher than October’s $38.2 billion shortfall was in March of 2015 after port-strike challenges caused the country-specific deficit to balloon to $40.5 billion. America’s exports to China plummeted 25.9 percent, and our imports of their wares declined 4.0 percent.
Even services hurt the total this time. The monthly surplus fell to $22.6 billion, down roughly $100 million to start the final quarter of the calendar year.
This is our first look at fourth quarter trade data, and it is not encouraging. America’s trade imbalance will likely hurt the final gross domestic product (GDP) tally for 2018. We’ll get our first look at the end of January. For now, the data continues supporting the narrative that America is the world’s growth engine. Other countries are dealing with greater slowdowns in their activities which is creating a more difficult trade deficit for our nation. Global economic slowing is happening.
