July 2011 Trade Balance Is a Positive Economic Indicator

With the trade data coming in line with Econintersect’s expectations based on container counts (analysis here) and the price of crude oil, trade data says the economy expanded in July 2011.

When imports (eliminating oil) grow, it is a sign of an expanding economy.  The headlines say imports declined by $0.5 billion – but oil was a $2.7 billion drag.  Imports, other than oil – expanded $2.2 billion.  A positive sign for a growing economy.

Growing exports too would be a sign of an expanding global economy (or at least a sign of growing competitiveness.  Here, exports grew $5.7 billion with the drags being commodities.  Most categories of manufactured items grew.  Seems this is a positive sign.

Overall, exports have been at record levels for the last 11 months, but imports have also been at record levels for 5 of the last 8 months. But there is a clear deterioration in the trend for exports.

The real news is that the balance of trade is now within the historical pre-recession range. Taken overall, trade data in recent months is a real indicator that the economy is weakening.

Nothing is this data (and Econintersect is on high alert) – smells recessionary.  We are not convinced the economy will continue to expand (“modestly”?), or it will recess.  This is an open question which must be asked as each new piece of data is reviewed.  So far, if surveys are correct, the only sign of a recession is that many believe the USA is already in a recession.

Related Articles:

All Articles on Trade Data

All Articles on Container Counts

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