With the U.S. June trade deficit shrinking to a multi-year low of $34.2 billion, a $10 billion decrease from May, and lowest since October 2009, U.S. exports stole the show by posting the highest level of goods and services ever generated by this nation in a single month. Even shipments to the depressed European markets hit a positive tone.
The setting of this record is all the more remarkable in that this achievement was accomplished without the benefit of increases in aircraft or automotive shipments, which tend to distort “peaks and valleys” due to their disproportionate impact as a whole.
In viewing the favorable export sector as a component of America’s global gross domestic product leadership, it has now reached a level of 12%, exceeding the revenues generated by other commercial/industrial sectors of America’s overall economic gross domestic product results, well above runnerup China by more than a two-to-one ratio. In putting the U.S. ongoing export success in overall economic context, there are two major factors that are highly significant, but hardly given consideration in the ongoing national media dialogue:
1) The U.S. has historically shown little interest in exports throughout its 230 year history, due to its preoccupation with phenomenal internal growth, both in land, population, and domestic markets.
2) As a major shift into low-cost manufactured and natural resource goods occurred in the 1970′s and 1980′s, accelerated by the overseas shift of American factories, it had been assumed that the ever-mounting U.S. trade deficit, reaching a monthly average of $75 billion in the pre-”Great Recession days” was becoming a permanent component of America’s growth economy. Even then the severe drop-off to one-half of the monthly trade deficit total was considered a temporary expedient of the deep recession from which the U.S., and most of the rest of the world was suffering. Ironically, June’s low U.S. trade deficit results mirrored those of the depth of the Great Recession.
What should also be emphasized is that this favorable turn in America’s overall international trade balance was only marginally affected by energy imports from the OPEC oil monopoly, with a $500 million dollar monthly decrease from the previous month. It’s all but certain that America’s current “fracking” success will practically wipe out this deficit within the foreseeable future.
When comparing June 2013 versus 2012, what stands out is the strengthening of America’s capital goods shipments, such as construction and farm machinery. Technological innovations such as robotics, aircraft, automotive and other transportation services, as well as U.S.-owned intellectual property achievements have also added to the export total.
Although some observers may view these positive results as a temporary aberration, the current oil derivatives (gasoline, heating oil, diesel, jet fuel) already being exported to Mexico and Central American nations will be joined by the upcoming exports of natural gas, and potentially West Texas Intermediate (WTI) crude as both liquid natural gas (LNG) and an eventual U.S. crude oil surplus hit their stride.
Even as Environmental Protection Agency restraints may slow these highly favorable economic developments, there’s a good chance that the United States can foresee a positive trade balance before the end of the current decade.
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