Dr. Ed’s
Economic
Indicators

U.S. TRADE DEFICIT

Release Date: Monthly
Release Coverage: Mid Month (1.5-month lag)
Released By: U.S Census Bureau
Official Release (weekly): www.census.gov/foreign-trade/www/

Also known as the balance of trade, the United States Trade Deficit shows the difference between the valuation of the nation's exports less the valuation of imports. This index has historically been negative, which explains why it is commonly known as the U.S. Trade Deficit.

As stated at census.gov: "The Census basis goods data are compiled from the documents collected by the U.S. Customs and Border Protection and reflect the movement of goods between foreign countries and the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and U.S. Foreign Trade Zones. They include government and non-government shipments of goods, and exclude shipments between the United States and its territories and possessions, transactions with U.S. military, diplomatic and consular installations abroad, U.S. goods returned to the United States by its Armed Forces, personal and household effects of travelers, and in-transit shipments."

WHAT DR. ED SAYS:

The U.S. trade deficit provides insight into the strength of U.S. trade relations. It is important not to simply assume this number represents any sort of global dominance, but rather demand for products and currency. The deficit is a characteristic resulting from the United States' heavy consumption and another countries abundance of supply. This indicator tends to correlate closely to the value of the U.S. dollar, which reflects prices abroad, in turn affecting the overall demand for imports or exports. It is also important to keep in mind this indicator holds a high level of lag.

This indicator may be beneficial to institutions who maintain relationships with clients that are heavily involved in the import and export business. The report also gives a more in-depth view into which specific commodities, materials, and services are being imported and exported.

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