Who says the U.S. doesn’t make anything the world wants anymore? On Thursday, the Commerce Department reported international-trade data for June. The upshot: exports bumped up to a record $185 billion, while imports fell 0.9 percent from May to $227.9 billion. That left a smaller-than-expected trade deficit (the difference between the value of imports and exports) of $42.9 billion.
Despite growing evidence of a global slowdown, the world’s interest in America’s products and services doesn’t seem to be waning. Through the first half of 2012, exports are up 6 percent from the first half of 2011. A few takeaways.
Services matter. American companies can export without ever shipping overseas. Education, health care, and tourism are all services that are exported when foreigners come here to use them. Tourism, the subject of today’s The Number video, notched substantial gains in the month. To paraphrase Neil Diamond, on the plane and on the train, they’re coming to America.
The China trade. While U.S. exports to China continue to rise, so do U.S. imports from China. In June, the U.S. notched a $27.4 billion trade deficit with China, up more than 5 percent. The China trade deficit accounts for about 60 percent of the total trade deficit.
Falling oil. Oil prices play a huge role in determining the size of the trade deficit. And in June, falling oil prices helped keep the trade deficit down. The trade deficit with 12 countries of the Organization of Petroleum Exporting Countries (OPEC), fell $2.7 billion in June to $8.5 billion, nearly a one-third drop. For the first six months of 2011, net petroleum exports, the difference between the oil and oil products we bring in and the oil and oil products we send out, were almost $168 billion. In the first half of 2012, that figure fell to $160 billion, down about 5 percent.
A much-needed boost to growth. Everybody should be interested in the relative value of imports and exports, and in the changing flows. Oil has the capacity to act as a huge drag on economic growth when the price rises. The meter at a gas station can be seen as a rough measure of dollars being sucked out of the U.S. consumer and sent abroad. Just so, net exports (exports minus imports) is one of the key factors economists take into account when estimating the pace of growth. The smaller the trade deficit, the higher the rate of growth. After crunching the trade data, the investment bank Barclays boosted its growth estimate for the second quarter from an anemic 1.5 percent annual rate to a much more respectable 2.2 percent rate.