Amidst the economic gloom, the Census Bureau reports that the trade deficit is declining:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total May exports of $123.3 billion and imports of $149.3 billion resulted in a goods and services deficit of $26.0 billion, down from $28.8 billion in April, revised. May exports were $1.9 billon more than April exports of $121.4 billion. May imports were $0.9 billion less than April imports of $150.2 billion.
Sustainable recovery requires some unwinding of the global trade and financial imbalances, so this counts as good news. Nevertheless, it’s still the case that exports are far below their pre-recession high point. The trade gap is narrowing because imports have collapsed even further and faster. And ultimately we’re going to need not just a smaller trade deficit, but several years of surplus. It’s a reminder that however much additional stimulus in the U.S. may be desirable, even better would be additional stimulus from Japan, China, Germany, and the oil exporters. Those are the places where the world really needs more demand.
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