Over the last 40 years, Americans have grown accustomed to trade deficits. The last U.S. trade surplus was recorded in 1975 – when Gerald Ford was president.
That does not appear likely to change in the near future. Deficit increases have become a fact of economic life, but the size of the monthly increase is sometimes less than expected. That was the case in July. The Commerce Department reported Wednesday the deficit rose by less than expected in July. On the heels of June’s $43.5 billion deficit, the consensus called for a $44.8 billion deficit; instead the deficit registered a comparatively modest increase to $43.7 billion.
“In July, imports slipped 0.2% to $238.1 billion,” wrote Jeffrey Bartash for MarketWatch. “Imports of crude oil, autos and pharmaceutical goods all declined. Computer-related imports rose."
“Exports slipped a slightly larger 0.3% to $194.4 billion amid declines in shipments of new cars and trucks as well as household goods,” Bartash continued.
“Yet U.S. crude exports climbed to the highest level in nearly three years reflecting the nation’s status once again as a major oil producer. Domestic production has rebounded along with a rise in global petroleum prices.”
An important piece of the economic puzzle wasn’t included in the report but is certain to influence future reports – Hurricane Harvey, which, as Lucia Murtikani wrote for Reuters, “could sap some of the strength” of the economic outlook. Alexander Kuptsikevich, analyst for London-based FxPro.com, agreed.
“We should keep in mind that this data relates to July and doesn’t take into consideration the current consequences of [Hurricane] Harvey,” said Kuptsikevich. “In the coming months, a shortfall may grow due to an expected increase in energy imports. The falling exports amid a weakening dollar may be negatively perceived by market participants and cause a short-term wave of weakening of the U.S. currency.”
Alex Doubet, CEO of DoorHomes.com, also observed it is important to remember economic figures were compiled before Hurricane Harvey struck the Texas coast. Likewise, they were compiled before Hurricane Irma threatened the Southeastern U.S.
And hurricanes can have wide-ranging infuences on the economy.
“Hurricane Harvey is going to have a particularly perverse impact on housing in Texas as its damage constrained inventory in Houston even further,” Doubet said. “Good economic signs mean would-be homeowners will continue to bump into the top end of their buying power as they look to buy homes, particularly first-time buyers.”
