September 2017 Trade Balance

Data were mixed in the latest release on International Trade from the Bureau of Economic Analysis.  On the one hand, the trade deficit increased which will subtract from gross domestic product (GDP).  On the other hand, both components of the indicator increased versus a month earlier, suggesting growing global output.  In total, the trade deficit increased to $43.5 billion in September 2017, up $700 million from August’s revised tally of $42.8 billion (originally $42.4 billion). 

Growth from the goods deficit outpaced the improvement in the services surplus.  America’s goods shortfall reached $65.4 billion, up $600 million in the period.  Meanwhile, the service surplus moved up $200 million to $21.9 billion.  Year-to-date, the goods and services deficit increased $34.5 billion or 9.3 percent from the same period in 2016. 

While the import/export relationship is not going to help our nation’s GDP statistic (because the growing shortfall subtracts from the other GDP components), it demonstrates an improving global economy.  In particular, growing imports of capital goods suggest companies are investing in equipment.  These outlays are often expensive, so firms tend to be willing to part with their cash or borrow money only when they believe there will be a positive return on their investment.  Many of the indicators Atlas follows are corroborating the narrative of an economy which is continuing to grow.  Like most of the current expansion, the economy is far from perfect but heading in the right direction.