The US trade deficit narrowed more than expected in May as exports rose and imports slipped. Exports increased $1.9 billion to $123.3 billion and imports fell by $0.9 billion to $149.3 billion.
That put the deficit at $26.0 billion, or about $3 billion less than many economists had expected.
You have to look hard to find any benefits from a recession, especially as big as this one, but the dramatic drop in the trade gap qualifies.
The reason is fairly simple: falling oil prices have cut the nation’s energy bill in half and the decline in consumer spending has reduced the imports of all kinds of items.
Of course, the global recession has dented exports. But May’s data may be suggesting that demand around the world (Asia?) is stabilizing as exports benefited from a $2.1 billion increase in the sale of industrial supplies and materials.
Too soon to say for sure if this will continue because one month doesn’t qualify as a trend but it’s worth keeping an eye on.
Final point - exports are part of the GDP equation, and the rise, if it continues into June, will support the 2Q number.
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