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| Commentary on the June 2001 Trade Figures |
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Thursday, August 30th, 2001
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America�s monthly trade deficits (goods and services basis)
June 2001 $29.4 billion
May 2001 $28.5 billion
June 2000 $31.0 billion
June 1999 $23.3 billion
�The U.S. trade gap widened slightly in June.� So said the Wall Street Journal in reporting the latest trade figures. �Slightly� is evidently a word with different meanings for different people. The Journal used the adverb to describe a rise of 3.3 percent over the previous month. Work that out. A rise of 3.3 percent a month represents an annual rate of more than 47 percent! Put a little more provocatively, at this rate of monthly increase the deficit is destined to multiply seven-fold in five years!
Admittedly the latest deficit is less than the $31.0 billion recorded in June of 2000. But it represents a rise of 26 percent on June 1999 (a time when the East Asian financial crisis was being blamed for what was assumed at the time to be a temporary ballooning of America�s deficits).
With the latest figure, we now have a total for the first six months of 2001: $184.9 billion. If one assumes a similar performance in the second six months, it might appear we are on track for a total goods-and-services deficit for the year of $370 billion. I continue, however, to stick by my forecast of $350 billion, compared to a total of $376 billion for 2000. My reasoning is that as business activity in general and investment in particular remain subdued in the United States imports will run somewhat lower than they did in the second half of last year.
That said, even an outturn for the year of $350 billion, representing as it would a reduction of about 5.5 percent on 2000, is vastly too high. Worse, it is clear that the only reason for the reduction is that the American economy has suffered a slowdown. Once that slowdown is over, the deficits are going to start soaring again.
I attach the official announcement of the June trade figures.
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U.S. International Trade in Goods and Services Highlights � June 2001
Release date: August 17 , 2001
Goods and Services Deficit Increases in June 2001
The Nation's international deficit in goods and services increased to $29.4 billion in June, from $28.5 billion (revised) in May, as exports decreased more than imports.
Goods and Services
* Exports decreased to $86.0 billion from $87.7 billion in May. Goods were $60.8 billion in June, down from $62.8 billion in May, and services were $25.1 billion in June, up from $24.9 billion in May.
* Imports decreased to $115.4 billion from $116.2 billion in May. Goods were $96.5 billion in June, down from $97.3 billion in May, and services were $18.8 billion in June, virtually the same as in May.
* For goods, the deficit was $35.7 billion in June, up from $34.4 billion in May. For services, the surplus was $6.3 billion in June, up from $6.0 billion in May.
Goods by Category
* The May to June change in exports of goods reflected decreases in capital goods; consumer goods; industrial supplies and materials; and foods, feeds, and beverages. Increases occurred in automotive vehicles, parts, and engines and other goods.
* The May to June change in imports of goods reflected decreases in industrial supplies and materials; capital goods; and other goods. Increases occurred in automotive vehicles, parts, and engines; foods, feeds, and beverages; and consumer goods.
Goods by Geographic Area (Not Seasonally Adjusted)
* The goods deficit with Mexico increased from $2.7 billion in May to $3.1 billion in June. Exports decreased $0.2 billion (primarily telecommunications equipment) to $8.4 billion, while imports increased $0.2 billion (primarily automobiles and automobile parts and computers and computer products) to $11.5 billion.
* The goods deficit with China increased from $6.1 billion in May to $6.6 billion in June. Exports increased $0.2 billion (primarily transport equipment) to $1.8 billion, while imports increased $0.6 billion (primarily toys, games, and sporting goods and articles of apparel and clothing) to $8.4 billion.
* The goods deficit with Japan increased from $4.8 billion in May to $5.0 billion in June. Exports increased $0.1 billion (primarily computers and computer products) to $5.0 billion, while imports increased $0.3 billion (primarily toys, games, and sporting goods) to $10.0 billion.
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Contact Eamonn Fingleton |
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