Trade Deficit Surges During the Recession

The trade balance hit -$63.6 billion (monthly, seasonally adjusted) in July. The trade balance has been deteriorating since the recession began, in contrast to what usually happens — an improvement in the trade balance, as imports decline with a decline in domestic economic activity.

Figure 1: Trade balance of goods and services (blue), in millions of dollars, seasonally adjusted, on a balance of payments basis. NBER defined recession dates shaded gray; assumes last recession ended in April. Source: Census via FRED, NBER, author’s calculations.

So another stylized fact bites the dust during the Trump administration.

And, pretty unambiguously, the trade deficit has increased since Mr. Trump took office.