Latest BEA Data: There’s Some “Light” on the Trade Front

By SBE Council at 7 June, 2022, 4:30 pm

by Raymond J. Keating –

According to the latest monthly trade report from the U.S. Bureau of Economic Analysis, U.S. exports increased for the third straight month in April.

Now, before we all get too excited, the data is in nominal terms, that is, there is no adjustment for inflation into real dollars. However, the goods portion of monthly trade also is presented in real terms, and real goods exports have grown in each of the last two months.

Meanwhile, imports declined in April, after a big jump up in March.

If we take the first four months of 2022 and compare it to the same period last year, we can begin to see some light on trade.

Specifically, exports (nominal dollars) from January-April 2022 were up by 18.8 percent compared to January-April 2021. That growth runs well ahead of inflation (indeed, roughly more than double the inflation rate). At the same time, import growth was even stronger, with imports over January-April 2022 jumping by 24.2 versus January-April 2021. Keep in mind that nearly all imports are inputs to U.S. domestic businesses.

Expanding trade is vital to enhancing U.S. economic growth; to expanding small business opportunities via both exports and imports; to consumers seeking price relief during a period of high inflation; and to workers who earn more on average in export businesses.

And if policymakers are serious about getting the economy back on a track of strong growth and lower inflation, then the U.S. must get back in the trade game, if you will. And what I mean by that is to re-take global leadership on advancing free trade. During the Obama administration, this role was neglected, and under the Trump and Biden administrations, it was and has been abandoned.

It’s time for Congress and the Biden White House to re-engage seriously in favor of free trade.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.