Trade is Slowly Clawing Back

By at 8 January, 2021, 11:07 am

by Raymond J. Keating-

Trade had been a drag on economic growth prior to the pandemic hitting, and then, of course, both exports and imports dropped precipitously. As noted in the latest trade report from the U.S. Bureau of Economic Analysis, the slow clawing back has been underway for the past five to six months.

Monthly exports (seasonally adjusted) plummeted by 31.3 percent from February to May of this year – from $209.7 billion to $144 billion.

Since May, the slow recovery brought exports back to $184.2 billion in November. That’s still down by 12.2 percent versus February. Over the longer term, exports previously suffered from a stagnation that began in May 2018.

Source: Federal Reserve Bank of St. Louis, FRED

The story is similar, though slightly less severe, regarding monthly imports.

They registered $246.7 billion in February, and declined by 19.1 to $199.6 billion in May.

Imports actually recovered to $252.3 billion in November – slightly above the February level. That’s positive. But it also must be noted that imports have not returned to the level registered in October 2018 ($266.7 billion).

Source: Federal Reserve Bank of St. Louis, FRED

Trade is vital to U.S. economic growth. Expanding exports mean growing opportunities for entrepreneurs, businesses and employees. Increasing imports reflect a growing domestic economy, with nearly every item imported being an input to a U.S. business.

The new administration and Congress need to start quickly working to return the U.S. to a leader of advancing free trade around the world. Free trade, which simply means reduced governmental costs imposed on the ability of businesses and individuals to exchange goods and services, is vital for U.S. and global economic recovery and growth. And lower barriers to global markets will help many small businesses grow and recover more quickly from the devastation of the COVID-19 economy.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.






News and Media Releases