Oil, Sluggish Growth, and Manufacturing Help Cut Trade Deficit
Thursday, November 08, 2012
|Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).|
A nearly 24 percent surge in U.S. oil exports
to a new record helped drive down the overall U.S. trade deficit by 5.12 percent in September and helped propel total American exports to a new all-time high.
The deficit’s decline to its lowest monthly level since December, 2010 was also fueled by reductions in longstanding American trade shortfalls in manufacturing, and commerce with the economically troubled Eurozone, plus the weak growth of the total U.S. economy.
Given the anemic U.S. recovery, a shrinking trade deficit is better news for Americans than the deficit growth recorded until recently. But one of the nation’s biggest economic challenges remains unmet – generating healthy levels of output and employment growth without boosting trade deficits and the national debt once again.
From August to September, U.S. oil exports jumped from $9.03 billion to $11.18 billion. The latest monthly total surpassed the previous record of $10.83 billion, set in December, 2011, by 3.23 percent.
The $2.15 billion August-to-September oil export increase accounted for fully 38.23 percent of the $5.62 billion improvement in total exports – which also hit an all-time high of $187 billion.
In addition, the September trade deficit figure reduced the year-on-year increase in the overall U.S. trade deficit to a crawl. For the first nine months of this year, the deficit is now running only 0.46 percent higher than its comparable total last year. From the third quarter of 2011 to the third quarter of 2012, this combined goods and services trade deficit actually fell by five percent.
The U.S. manufacturing trade deficit sank by 7.89 percent in September, from $60.99 billion to $56.18 billion. Manufactures exports fell by 0.94 percent in September, from $86.10 billion to $85.29 billion, while industrial imports decreased by 3.82 percent, from $147.09 billion to $141.47 billion.
Year-on-year, however, the manufacturing deficit is still 8.60 percent higher than last year’s January-to-September total, as the 6.14 percent rise in exports has been more than offset
by a 6.42 percent increase in imports.
Another main source of the monthly trade deficit’s improvement was the 21.42 percent nosedive of the chronic U.S. goods trade gap with a Eurozone that may already have fallen into recession. U.S. goods exports to the EZ declined by 1.90 percent in September, from $15.81 billion to $15.51 billion. But U.S. goods imports from the 17-country group were down 9.33 percent, from $25.52 billion to $23.14 billion.
On a January-September basis, however, the U.S. merchandise deficit with the Eurozone is 12 percent greater this year than in 2011.
The smaller but just as longstanding U.S. merchandise deficit with Japan fell even faster in September – by 30.63 percent to $4.82 billion.
America’s biggest bilateral merchandise trade
deficit, with China, rose another 1.29 percent in September, from $28.69 billion to $29.06 billion, as exports and imports both edged up. On a January-September basis, the goods deficit with China is running 6.78 percent ahead of last year’s 12-month record.
The biggest negative in the September trade report came from advanced technology products, where the chronic U.S. deficit increased by 6.59 percent, from $6.73 billion to $7.16 billion. U.S. high tech goods exports increased by 0.86 percent but imports were up 1.98 percent. On a year-on-year basis, the high tech deficit is down 8.75 percent so far in 2012.
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).