It has been recently reported that U.S. GDP grew at a rate of 2.9% in the third quarter. While a large portion of this growth can be attributed to the continued strength in consumer spending, a significant portion can be credited to the shrinking of the U.S. trade deficit. Over the past year, sluggish demand for American goods and a strong U.S. dollar have widened the already large U.S. trade deficit. However, a recent report shows that the trade deficit contracted by 9% in September as a result of a .6% increase in exports and a 1.3% decrease in imports. The rise in exports reflects increased foreign interest in airplanes and industrial engines manufactured in the U.S. Meanwhile, the decline in imports is due to decreased purchase of foreign pharmaceutical products and civilian aircrafts.
The reported statistic is a 19-month low for the country’s trade deficit and is an important consideration amid discussions of the Trans-Pacific Partnership with the European Union. In addition, the topic of trade has been a highly contested topic within this year’s presidential debates. The current state of the trade deficit will surely shape the upcoming policy changes of our next elected president.