The latest US trade figures, for April, show a clear continued trend to widening of the US trade deficit - as can be seen in Figure 1.
More significant than the marginal $238 million increase in the deficit between March and April, from $40.05 billion to $40.29 billion, was the trend in the three month moving average for the monthly deficit – shown in Figure 2. This widened from $28.4 billion to $40.2 billion. Taking this average since its low point in June 2009 the monthly deficit has increased from $26.8 billion to $40.2 billion. This average deterioration of $13.3 billion equates to an annualised rise in the US trade deficit of $160 billion.
Figure 2
This trend of a significantly widening trade deficit is evidently not being picked up enough among US analysts. The Wall Street Journal carried a survey of analyses of the trade figures, but of those cited only Well Fargo clearly projected a further widening of the trade gap. However Wells Fargo did not analyse the overall longer term trend clearly - primarily situating it in terms of the fact that the US economy is currently growing more rapidly than other developed economies: ‘We expect the deficit to widen further this year as growth in many trading partners’ economies lags that of the U.S.’
However, as this blog has noted previously, the widening of the US trade deficit already started in summer 2009. The trend is therefore more fundamental than the differential rates of economic recovery in the first part of this year.
Ian Shepherdson of High Frequency Economics did note that the April data confirmed a weak start to US trade in 2010: 'The headline number is flattered by a rebound in the aircraft surplus and an unexpected dip in the oil deficit, which offset a $1.2B increase in the core deficit. Goods exports ex-oil and aircraft fell 2.0%, after a 4.8% jump in March. Stepping back from the noise, the post-Lehman rebound in trade does now seem to be slowing. This is disappointing, given that the strengthening of the dollar cannot yet be playing a part.' But Shepherdson failed to to note the longer term deteriorating trend.
RDQ Economics missed the main point, arguing, 'The small declines in imports and exports are nothing to worry about (yet) as the three-month trends in import and export growth remained robust.' In reality the US trade balance is clearly deteriorating.
Zach Pandl, of Nomura Global Economics, had clearly not been following trends clearly, writing, 'we had expected a significant improvement in the real trade balance this month' - a view that could not be arrived at if the widening deficit which has been developing for ten months was being followed.
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