Trade Declines in November

By at 9 January, 2024, 8:01 pm

by Raymond J. Keating –

Trade matters to U.S. entrepreneurs, businesses and workers, not to mention, of course, consumers.

Consider that in 1960, for example, U.S. real exports stood at 3.1 percent of real GDP, while in 2022, that had risen to 11.2 percent. Meanwhile, real imports registered 3.5 percent of real GDP in 1960, and that came in at 16 percent in 2022.

Indeed, from 1960 to 2022, the increase in real total trade (exports + imports) equaled 31.1 percent of real U.S. economic growth. And keep in mind that nearly every import into the U.S. is an input for a U.S. domestic business, while exports account for opportunities for American entrepreneurs, businesses and workers.

As for the latest trade numbers from the U.S. Bureau of Economic Analysis, exports in November 2023 declined by 1.9 percent compared to October, with imports falling by the same percentage. And there are in nominal dollars, i.e., excluding inflation. The goods data in the report offer real numbers, with real goods exports in November down by 2.3 percent and real goods imports off by 2.4 percent.

As for year-to-date numbers, exports (again, in nominal terms) grew by 1.0 percent compared to the same period last year, which would translate into a decline in real terms. And as for imports year-to-date, these were down by 3.6 percent, with the decline worsening after inflation is considered. Another important point to understand about imports is that they reflect the state of the domestic economy, that is, during periods of strong growth, imports also grow robustly, and during economic sluggishness or downturns, imports either stagnate or decline.

So, the latest trade data offer a grim take on trade in November and through the first 11 months of 2023, which in turn works as a negative for the overall economy.

When will policymakers on both sides of the political aisle return to economic sanity on trade, and in turn, work to advance trade agreements that provide relief from governmental burdens, obstacles and costs? The longer the U.S. is stuck in an anti-free-trade mentality, the greater the toll on American entrepreneurs, businesses, workers and consumers.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.


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