The Latest BEA Data on Trade: Inflation Undermines Gains

By SBE Council at 6 April, 2022, 9:01 am

by Raymond J. Keating –

The latest report on international trade in goods and services from the U.S. Bureau of Economic Analysis indicated, at first glance, that trade was moving in the right direction in February. That is, both exports and imports grew. However, inflation alters that story.

The BEA noted that exports in February grew by 1.8 percent and imports by 1.3 percent.

Imports appeared to be growing since July 2021, while exports were up from September 2021 but largely had stagnated over the five most recent months.

However, these numbers are not adjusted for inflation.

That is, they are nominal measures, rather than inflation-adjusted (or real) data.

This BEA trade report, however, does offer a look at real exports and imports of goods (not including services). Real goods exports in February were still up compared to September of last year.

However, real goods exports were down versus October 2021, and had declined in both January and February of this year. Real goods imports also were down in February 2022 versus January 2022, while up versus July 2021.

All of this matters because trade very much matters of the U.S. economy and to American small businesses. For example, real total trade (that is, real exports plus real imports) equaled 30.3 percent of real GDP in 2021, up 6.3 percent in 1955, for instance.

Also, nearly all imports are inputs of one kind or another to domestic U.S. firms, from retailers to manufacturers. And finally, according to the latest report from the U.S. Census Bureau, 76.3 percent of U.S. exports have fewer than 20 employees, and 76.7 percent of importers also have fewer than 20 workers.

Expanding trade is vital to the well-being of small businesses, U.S. workers, consumers, and our economy, and therefore, policymakers need to get back to advancing free trade.

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