U.S. Outlook: Trade balance improves, but it’s not a good thing

Scott Anderson
Posted by Scott Anderson
Chief Economist

The U.S. trade deficit narrowed to $40.4 billion in March, beating economists’ consensus expectations.

Chart showing monthly trend line of the US trade deficit.Unfortunately, the recent narrowing in the trade deficit has been driven by import declines rather than better export performance.

For more details about what’s going on, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on May 6.

Key observations:
  • The trade gap shrank 13.9% month-over-month and was the smallest since February 2015.
  • Last month the biggest import declines came from consumer goods and food & beverage — either reflecting waning consumer demand or declining prices, or both.
  • U.S. exports have been declining now for 15 consecutive months, while imports were down a more substantial 9.1% from March 2015.
  • Continued weak growth abroad and relatively strong U.S. dollar nearly ensures the U.S. trade deficit will remain a net drag on U.S. GDP growth this year.

Click here to read my full report.

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