Americans need to pay attention, too. In October the U.S. trade deficit narrowed dramatically to just under $30 billion. This trade improvement is a surprise to most analysts who expected the trade deficit to widen. Currently available estimates indicate that the narrowing represents an unanticipated second month in a row of reductions. This trend heralds a major change to the overall landscape of trade. Here’s the rub, experts warn the rosy numbers won’t necessarily lead to big increases in the caps for fourth-quarter growth.
The latest trade data is a further testament to the administration’s willingness to follow the data and the prevailing economic wind. This important effort follows fallout from the recent shutdown. Many analysts consider the narrowing trade deficit to be encouraging. They caution it could overstate the projected announcement’s boost to fourth quarter real GDP growth due to potentially overstating the effect. The current projections show the potential impact to be minimal.
The shrinkage of the trade deficit therefore signals a significant reversal in the pattern of investment across borders, largely led by transfers of precious metals. The activities fueled by this investment have led to record-breaking trade accomplishments. They likely won’t provide much in the way of lasting positive impacts on our nation’s economic growth. At the same time, as the federal government moves slowly to process earlier economic indicators, this clouds the analysis of current trends.
This has left economists to guess about what’s to come as the trade landscape continues to evolve. Trade deficit was forecasted to grow in October. Analysts had forecast the trade deficit to widen in October. The real story is an extreme reduction in area that warrants deeper analysis.