· During
June, the
U.S. foreign trade deficit narrowed again to $56.8B after shrinking to
the little-revised $59.2B in May. A deficit of $61.9B had been the
Consensus expectation for June. So far this year the monthly trade deficit has averaged
$58.6B versus $59.7B during the first six months of 2007.
· In constant
dollars the picture is even more encouraging. The trade deficit in goods
narrowed to $39.1B from $43.5B in May and in 2008 the real deficit has
narrowed by more than $10B to an average $46.3B. For the second quarter,
the initial estimate indicated that the narrower trade deficit added 2.4 percentage points to
real GDP growth, a figure that should be revised up. That was after additions between 0.8 and 1.4 percentage points
during the prior three quarters.
· U.S. exports surged 4.0% m/m during June after an upwardly revised 1.2% increase in May. Annualized, exports have risen at a 26.6% annualized rate during the last six months versus 13.0% growth during 2006 and 2007.
· Goods exports rose 5.1% during June after an upwardly revised 0.9% gain in May. Adjusted for prices, chained dollar exports rose 4.0% (13.4% y/y). Real exports of nonauto consumer goods jumped 5.3% (16.7% y/y) after a 0.2% dip during May. Exports of capital goods also were strong and rose 3.0% (10.1% y/y). Exports of autos, parts & engines surged 5.7% (7.4% y/y) while real exports foods, feeds & beverages jumped 5.9% (19.2% y/y).
· Exports of
services rose 1.4% (16.7% y/y) and that followed an upwardly revised
2.0% jump during May.
Travel exports rose 0.6% (21.9% y/y) while passenger fares surged again,
in June by 4.4% (33.4% y/y).
· Petroleum imports did bounce back in June by 14.6% after the modest decline during May. However, adjusted for the higher prices, petroleum imports recovered only half of their May decline with a 4.8% (-8.3% y/y) increase. The quantity of energy-related imports of petroleum products fell 7.6% y/y while the average cost for a barrel of crude oil was $117.13 (92.0% y/y) in June.
· Month-to-month,
imports of nonpetroleum products fell 1.4% during June. Measured in chained 2000
dollars these imports fell 0.6% (-3.9% y/y) after a revised 1.9% plop
during May. In chained dollars imports of capital goods surged cratered
by 3.4% (+1.4% y/y). Chained imports of nonauto consumer goods also fell
a hard 1.6% (+0.7% y/y) after a 3.9% May pop. Real imports of automotive vehicles &
parts ticked up 0.3% (-6.7% y/y) following their 4.6% drop during May.
· Services imports increased 1.0% (9.9% y/y). Travel imports ticked lower by 0.1% (+9.4% y/y) while passenger fares rose 4.4% (18.2% y/y).
· With China, the U.S. trade deficit in goods was roughly steady m/m at $21.4B. The deficit with China during the first six months of this year is the same as during last year's first six months. Exports to China rose 8.5% y/y during June and import growth moderated to just 2.9%. With Japan the trade deficit deepened to $6.1B as exports fell 3.2% (+10.3% y/y) and imports rose 7.9% (2.5% y/y).
· Challenging Times... from the Federal Reserve Bank of Kansas City is available here.
· The Evolution of the World Income Distribution from the Federal Reserve Bank of Philadelphia can be found here.