Trade Deficit Not Enough to Move GDP Much in Either Direction

Jon C. Ogg

Does the trade deficit even matter anymore? That is a legitimate question. The last time an actual trade surplus was seen was too long ago to even try to guess. Now a report on international trade shows that September’s trade deficit was $40.8 billion.

This was pretty much in line with estimates, as the Bloomberg consensus was a deficit of $41.1 billion. August’s wider deficit of $48.3 billion was revised to a slightly lower $48.0 billion.

The Bureau of Economic Analysis showed that September exports were $187.9 billion, $3.0 billion higher than the August exports reading. September imports were $228.7 billion, a drop of roughly $4.2 billion from August’s imports. The September decrease in the goods and services deficit was shown to reflect a decrease in the goods deficit of $7.3 billion to $60.3 billion. It also reflected a decrease in the services surplus of $0.1 billion to $19.5 billion.

Exports were actually up by 1.6% due to consumer goods. Capital goods exports were also up, partly offsetting lower dollars of industrial supplies exports. Imports were lower by 1.8%, with drops in industrial supplies, crude oil, autos and capital goods.

Wednesday’s report should not be anywhere close enough to creating any significant changes in the gross domestic product revisions ahead. That being said, it sounds at least a bit less like the constant currency pressure from a strong dollar is the only driving force now. The flip side of that coin is that international demand remains weak.

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