The U.S. Bureau of Economic Analysis (BEA) reported this morning that the U.S. trade deficit fell dramatically to $42.9 billion from $48 billion in May – the third consecutive monthly decline and the lowest trade deficit since December, 2010. The decline was led by a $2.6 billion surge in manufactured exports, followed by a $2.1 billion decline in oil imports and a $1.2 billion decline in manufactured imports. Here’s a chart of the overall balance of trade, beginning with January, 2010 when President Obama vowed to double exports in five years: Balance of Trade.
That’s all good news, but it’s more likely a temporary blip in a worsening trade picture. The jump in manufactured exports to $111.4 billion follows two previous monthly declines and remains below the high of $111.6 billion set in March. Here’s the chart: Manf’d exports vs. goal. While manufactured exports made up a little ground in June, June still marked the ninth consecutive month of failing to meet the president’s goal of increasing at a rate that would see them double in five years. And overall exports fell short for the eleventh consecutive month. Here’s a chart of the overall balance of trade in manufactured goods: Manf’d Goods Balance of Trade. As you can see, the improvement in June is an upward blip in an overall downward trend.
Exports to the European Union continue to hold up pretty well, good news in light of the worsening economy there. Imports from the EU fell, but only to a normal level following a spike in May.
The trade deficit with China rose by $1.4 billion to $27.4 billion. The record is $29.0 billion, set in August, 2011.
By the way, just to keep things in perspective, the $37 billion trade deficit in manufactured goods in June translates to an annual deficit of $444 billion. Assuming that two thirds of the cost to manufacture those products is labor – $297.5 billion – and that each manufacturing job pays $50,000 per year, the trade deficit in manufactured goods represents a loss of 5.95 million jobs.