Through the Monthly Volatility, U.S. Trade Deficit is Narrowing

Source: Economics Group of Wells Fargo Bank, N.A. Summary The U.S. trade deficit narrowed to $64.2 billion in March, as signaled by the advanced goods trade report and first estimate on Q1 GDP. The deficit has narrowed on trend since early 2022 and should continue to narrow over the course of the year as global growth outpaces domestic demand.

Not Much New News in March Trade Report

  • The U.S. trade deficit narrowed to $64.2 billion in March from $70.6 billion a month earlier. These data are broadly consistent with what was previously released in the advance goods trade report, as well as what was implied by net exports in the first estimate of Q1 real GDP. Net exports have now boosted growth for four consecutive quarters, as the trade balance reverses some of the pandemic-induced widening.
  • U.S. exports rebounded $5.3 billion (+2.1%) in March, led higher by goods exports specifically. All major end-use categories rose except for food and beverages. The 6.3% gain in industrial supplies exports largely reflects oil, with crude and fuel oil together accounting for essentially all of the gain in March. Pharmaceutical preparations posted the largest monthly gain behind oil, rising $1.4 billion during the month, and this export category accounted for about 60% of all consumer goods exports in the first quarter.
  • Import growth stalled, declining $1.1 billion in March. Food & beverages and consumer goods were the only categories to register a rise in imports. The level of consumer goods imports has come off its highs though it’s still running at an elevated level, consistent with a resilient U.S. consumer.

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