The Incredible Shrinking Trade Deficit

It almost seems too good to be true, but the U.S. trade balance for the month of June came in far better than many were expecting. For many years the market largely has ignored the trade balance. There is a reason that it is just referred to as the “trade deficit” now. The report for June showed that the trade deficit was down to $42.9 billion. This is down from $48.04 billion in May, and it marks the lowest monthly reading going all the way back to 2010.

This month’s report from the Commerce Department showed exports up more than $1.5 billion from the prior month to $184.97 billion and showed that imports were down by almost $3.5 billion to $227.9 billion.

We would note a caveat here. The Commerce Department reading appears to be based a lot on lower oil import prices as those prices fell by the most in three-years (crude imports fell to $26.38 billion from $29.38 billion the prior month). Exports reached a record based on cars and parts, industrial supplies and consumer goods.

The trade deficit with China did rise by just over 5% to $27.4 billion.

JON C. OGG