 | Trade deficit expands by $2.2 billion in June |
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| Posted Under: Data Watch • Trade |
Implications: Given market turmoil lately, the most timely economic data is new claims for unemployment benefits, which fell 7,000 last week to 395,000, the first week below 400,000 since April. The four-week moving average fell to 405,000. Continuing claims for regular state benefits fell 60,000 to 3.69 million. This data, along with chain store sales figures which were also solid, is the closest thing to real-time economic data we have. Exports fell more than imports in June, leading to the trade deficit expanding to -$53.1 billion, the largest trade deficit since October 2008. It was also a larger deficit than the consensus expected, in fact, of the 74 economic groups that forecasted the trade deficit, none thought it would be this high. Oil was the driving force behind the decline in both imports and exports, due to prices. Given these revisions, it looks like net exports were a smaller positive for real GDP growth than the government previously estimated. Recent reports on construction, inventories and trade suggest real GDP grew at about a 1.0% annual rate in Q2. Beneath the headlines, the total volume of international trade in and out of the US – imports plus exports – fell for only the second time in the past year. We don't see a recession in the cards for the US economy and expect the volume of trade to rebound as the economy picks up steam in the second half of the year.
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