May 2011 Trade Balance Says the Economy Is Not Weakening

The seasonally adjusted trade balance deficit in May 2011 grew by $6.6 billion driven by a $3.8 billion increase in crude oil costs and a contraction of $1.8 billion on export of industrial supplies and materials (e.g. fuel oil, cotton, plastics, chemicals, etc).

Overall, exports have been at record levels for the last 9 months, but imports have also been at record levels for 4 of the last 6 months.

The real news is that the balance of trade is now within the historical pre-recession range.  Trade is a real indicator that the economy is weakening.

The growing trade balance deficit tells us the economy is not contracting.

Related Articles:

Trade & Recessions – Missing the Forest for the Trees by Steven Hansen

The importance of Exports and Services Trade Re-evaluated by Henrik Isakson

An Alternate View of the Trade Balance Trend by Steven Hansen

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