Although the US trade deficit widened in April, the number ended up being better than expected. Furthermore, the March trade deficit was revised lower than originally reported.
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| Source: Econoday |
While this result is certainly a positive for the US economy, longer-term trade dynamics paint a different picture. The good news is that the US net imports of oil are declining, as the nation's production ramps up (
see discussion). The bad news is that the longer term trend in non-petroleum merchandise trade shows an increasingly larger deficit. Americans have not lost their taste for foreign made cars, phones, etc.
USA Today: - Imports grew ... 2.4% to $227.7 billion. Sales of foreign cars increased to $25.5 billion. Americans also bought more consumer goods, led by big gain in foreign-made cell phones.
It means that in the future, should fuel production in the US stumble for some reason, trade deficit will spike.
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| Source: JPMorgan |
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