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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | The trade deficit in goods and services expanded by $0.2 billion to $40.3 billion in April |
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Implications: The total volume of international trade – imports plus exports – declined 0.5% in April. But that follows a large 3.3% gain in March, leaving the total volume of trade up 22% since the bottom in May 2009, right before the V-shaped recovery began. We expect more increases in global trade in the months ahead, despite financial turmoil in Europe. Recently, the trade deficit has been expanding again, as the return to robust growth in the US has pushed up imports faster than exports. While some may worry about this trend, during recent decades a rising trade gap has been associated with a strong domestic economy, not a weak one. Moreover, Americans generate much higher returns on the assets we own abroad – like direct investment in factories in emerging markets – compared to what foreigners earn on US-assets (such as Treasury securities). As a result, the US has more of an ability than any other country to run significant and persistent trade deficits. Today's report also includes something called a "benchmark" revision of trade data going back the past several years. As a result, it appears some of the growth previously attributed to the first quarter of this year will eventually be shifted into late last year. In other news this morning, new claims for unemployment insurance fell 3,000 last week to 456,000. Continuing claims for regular state benefits declined 255,000 to 4.46 million, the lowest so far during the recovery.
Click here to read the entire report.
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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