April's Narrower U.S. Trade Deficit Looks to Have Been a Fluke

By: Paul_L_Kasriel

In price-adjusted terms, the U.S. trade deficit in goods widened by almost $3.9 billion in May compared with its narrowing of $5.7 billion in April. Real U.S. exports of goods decreased 1.5% or $1.5 billion in May. Real U.S. imports of goods increased 1.6% or $2.3 billion. In April, imports contracted by $4.6 billion. This occurred in part because of the interruption in imports from Japan of motor vehicle parts. Imports of Japanese-produced motor vehicle parts rebounded in May and likely did so in June, too (see Chart 2). 

Also in April, there appeared to be an unusual decline in U.S. petroleum-product imports, perhaps in response to the previous spike in energy prices. There was a rebound in petroleum-product imports in May, however (see Chart 3).

Although I expect exports to remain the star-performing sector of the U.S. economy in the foreseeable future, with a slowing in emerging market economic growth led by China, I expect this star sector to not shine quite as brightly in the coming 12 months.

Paul Kasriel is the recipient of the 2006 Lawrence R. Klein Award for Blue Chip Forecasting Accuracy

by Paul Kasriel
The Northern Trust Company
Economic Research Department - Daily Global Commentary

Copyright © 2011 Paul Kasriel
Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director of Economic Research in 2000. His economic and interest rate forecasts are used both internally and by clients. The accuracy of the Economic Research Department's forecasts has consistently been highly-ranked in the Blue Chip survey of about 50 forecasters over the years. To that point, Paul received the prestigious 2006 Lawrence R. Klein Award for having the most accurate economic forecast among the Blue Chip survey participants for the years 2002 through 2005.

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