Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The Trade Deficit in Goods and Services Came in at $47.6 Billion in April
Posted Under: Data Watch • Trade
Supporting Image for Blog Post

 

Implications: The trade deficit grew in April, coming in at $47.6 billion, a larger trade deficit than the consensus expected.  While imports increased $1.9 billion in April and exports declined by $0.5 billion, both imports and exports are up from a year ago: exports by 5%, imports by 8.3%.  By definition, the trade gap is equal to capital inflows.  If foreigners do not buy goods and services with their dollars they must invest them back in the US.  As a result, Americans are able to purchase more than we produce.  Some say this is unsustainable and that past and present trade deficits must be offset by future trade surpluses.  But we disagree.  Foreign investors are willing to be paid a very low return on their US investments, so low that Americans still earn more on their investments abroad than foreign investors earn on their US assets.  As long as that continues, and we see no reason why it shouldn't, the US can continue to run trade deficits.  Moreover, many of the policies President Trump is pursuing, including cutting tax rates and allowing for construction of more energy infrastructure, will make the US an even stronger magnet for foreign capital.  Meanwhile, the US should continue to get more competitive.  Just look at the energy sector.  A decade ago, our petroleum product imports were about nine times our exports.  Now these imports are 1.5 times exports.  In late November, OPEC decided to cut oil production by more than 1 million BPD (barrels per day).  Since then, oil prices have increased and, as a result, oil production in the United States has increased by almost 650,000 BPD, taking market share from unstable, less free-market countries.  The ability of US producers to respond to market prices outside of government control is also why oil prices have not spiked back to old highs, and have declined slightly again.  In other recent news, automakers reported sales of cars and light trucks at a 16.7 million annual rate in May, down 1.3% from April and down 3.0% from a year ago. We expect the auto industry to continue to gradually return to more sustainable levels of about 15.5 million units per year.  The decline does not signal wider economic problems.  Instead it reflects consumers shifting purchases to other sectors.

Click here for PDF version

Posted on Friday, June 2, 2017 @ 12:37 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Nonfarm Payrolls Increased 138,000 in May
The ISM Manufacturing Index Rose to 54.9 in May
Personal Income and Personal Consumption Both Increased 0.4% in April
We Don’t See No Stinkin’ Bubbles!
M2 and C&I Loan Growth
New Orders for Durable Goods Declined 0.7% in April
Real GDP was Revised up to a 1.2% Annual Rate in Q1
Existing Home Sales Declined 2.3% in April
New Single-Family Home Sales Declined 11.4% in April
Tax Cut Politics
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.