On the brighter side, the 3.5% drop in U.S. GDP last year was more modest than almost all major world economies except China.

By Manuel Gutierrez, Consulting Economist to NKBA

There was a modest improvement in the U.S. trade position in April, with the negative balance falling from $75 billion in March to the current $69 billion. Despite this positive movement, the balance has been worsening since the beginning of the pandemic in March 2020, when the deficit was $47 billion.

In fact, the balance of trade had remained relatively stable throughout the decade from 2010 to 2019, shown by the red line in Figure 1, ranging between $33 billion and $56 billion, with a monthly average of $45 billion.

One reason for the improvement in trade since the beginning of last year is that the U.S. economy has recovered faster than most of its trading partners. This has led to increases in U.S. imports, driven by Americans’ needs, which are rising faster than U.S. exports that are dependent on the strength of foreign economies.

Most countries had contractions that were worse than what the U.S. experienced, although China was a notable exception.

The U.S. was down 3.5% last year, but the U.K. fell more than twice that, with a 9.8% drop. France was down 4.7% and Germany, 4.8%. This means those countries had less of an ability to purchase American goods.

U.S. imports in April were $274 billion, a 1.4% drop from the previous month. As illustrated in Figure 1, March had set an all-time record for U.S. imports, but that was surpassed in April.

Texas, California and New York account for more than one-third of all U.S. exports.

Exports rose in April, up by 1.1% to $205 billion, but still remain below the historically high levels reached in 2019, when the U.S. economy was booming.

Trade data includes imports and exports of both Goods and Services. The vast majority of trade dollars are in the form of Goods, accounting for 79% of the value of all U.S. exports and imports combined. Services represents the remaining  21%.

Generally, Services accounts for a greater proportion of U.S. exports compared to imports, with 30% of American exports in that category — double the 15% for imports.

This has resulted in a favorable Services trade balance of $18 billion in April (Figure 2). However, the favorable picture was offset by the negative balance of $87 billion in goods. That is, the U.S. imported $87 billion more  goods than it exported.

Examining where U.S. exports originate, it’s not surprising to find that the largest state economies are also the biggest exporters.

Leading in exports are Texas, at 20%; California, at 10%, and New York, at 5.4%. These three states, which jointly account for more than one-third of total U.S. exports, are highlighted in Map 1.

Texas is known to be highly dependent on oil production, with over a quarter of the state’s exports in this category. Chemicals, Petroleum and Computers & Electronic products, together with oil, account for more than two-thirds (68%) of the state’s exports.

California’s exports are more diversified, with six different product categories accounting for 70% of them. Computers & Electronic products generate 22% of its exports, with Machinery (12%), Transportation (11%), Chemicals (10%), and Agricultural products (8%) rounding out the top categories.

New York is also fairly diversified, with five broad categories accounting for 72% of its exports. Leading are Primary Metals, which accounts for just under one-third of the state’s exports.

Louisiana is the fourth largest exporter, withAgricultural products representing 34% of its total. Other states ranking high by their export volume are Illinois, with 3.7% of the total; Florida, with 3.1%, and Michigan, generating 3% of U.S. exports.

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