April 2, 2020
The trade deficit for February narrowed $5.5 billion to $39.9 billion after having narrowed by $3.1 billion in January. The $887 billion trade deficit in goods for 2018 was a record high level. It narrowed slightly to $866 billion in 2019.
Increasing energy production in the U.S. is having a significant impact on our trade deficit in oil. Since 2007 oil exports have surged from $3.0 billion to $16.0 billion, while oil imports have fallen from $24.0 billion to $15.0 billion. As a result, the trade deficit in oil has been cut by about $22.0 billion from a deficit of $21.0 billion to a surplus of $1.0 billion. Beginning in September of last year– for the first time ever — the U.S. has has a trade surplus in oil. That means that its reliance on Middle East oil has been greatly diminished.
Frequently exports and imports can be shifted around by price changes rather than the volume of exports and imports. Thus, what is really important is the trade deficit in real terms because that is what goes into the GDP data. The “real” trade deficit narrowed by $9.0 billion in February after having narrowed by $2.0 billion in January.
As noted earlier, Increasing energy production in the U.S. is having a significant impact on our trade balance in oil. For the first time in history the U.S. has had a trade surplus in oil since September of last year.
Oil oil exports in real terms, however, still has a deficit of $3.5 billion. . As a result, the real trade deficit in oil has been cut by about $35.0 billion or 88% in the past several years and is the smallest since the early 1990’s.
In March of 2018 the U.S. surpassed Saudi Arabia and Russia and become the world’s biggest producer of oil. It has also become a net exporter of oil. Very impressive!
The non-oil trade gap has shrunk by about $6.0 billion in the past year to about $66.0 billion as non-oil exports have fallen 2.9% while non-oil imports have fallen by 5.7%.