US Trade Boosts Weak GDP in June

The US Trade Deficit improved for the month of June as exports regained strength. On August 4, the Commerce Department reported that the trade deficit decreased 6.2% to $79.6 billion, with exports of goods and services hitting an all time high of $260.8 billion.

The US trade deficit (or surplus) is measured using the Trade Balance of Goods and Services (chart above), which calculates net exports less net imports of all goods and services. A trade deficit means that the US is importing more than it is exporting.

While most of the US economy is showing signs of contraction, the improvement in trade was a bright spot, adding 1.4 percentage points to the gross domestic product. For the second quarter of 2022, the GDP fell 0.9%, adding of the previous quarter’s decline of 1.6%. The two quarterly declines in the GDP have many economists questioning whether the US has already entered a recession.

It is apparent that without the improvement in the trade deficit, the US GDP would have been significantly weaker.

The “trade balance” is not often a statistic that investors consider when trying to predict future economic growth, but as June’s reports indicate, exports can play a significant role to the growth of the US economy.

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