Narrower Trade Deficit for Goods

The international trade deficit did not come in anywhere as high as expected in March, implying that perhaps that pesky dollar strength’s trend abatement might be in the works is showing up in the numbers already. In fact, the trade deficit was down by some 9.5% to $56.9 billion. February’s reading was a deficit of $62.9 billion, and the consensus estimate from Bloomberg was a $62.6 billion deficit for the month of March.

Exports were down by 1.7% to $116.7 billion. Consumer goods showed a rather sharp drop, and there were low readings in autos, industrial supplies and food-related products. Exports of capital goods did manage to rise by 1.5%.

Declining domestic demand was down about 9% in consumer goods, and domestic capital goods were down by about 3.6%.

What is interesting here is that the difference may be enough to tweak gross domestic product (GDP) revisions marginally higher. As a reminder, the trade deficit acts a drag on GDP, so a lower deficit (less negative) acts as a plus on the domestic front.
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Another issue that stands out about the $56.9 billion deficit is not just that was lower than the $62.6 billion consensus, nor just that it was lower than the $62.9 billion from February. It really stands out that this was under the range of all economists.

This all sounds good on the surface, but it may be another generation or two before we ever get a trade surplus again. Stay tuned.