skip navigation

By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.


May Foreign Trade Data Reverting to (Unfavorable) Trends

Foreign trade data for May were released this morning and showed deterioration in the US trade deficit, with exports dropping more than imports. Much of these declines marked a reversion to underlying trends. That is, due to a strike that hit the California ports of San Pedro and Long Beach earlier this year, both export and import volumes were overly depressed in February and March, then in April both made up for lost time, in effect, after the end of the strike. We then saw a move back toward underlying trends with the May trade data.

Unfortunately, those underlying trends are not favorable. As seen in the accompanying chart, exports have been trending lower since last October, and after the aforementioned strike effects over February–April, May export levels are right in line with on an ongoing downtrend. On the other side of the ledger, imports were on a steady uptrend last year, and after some jagged, strike-related interruptions of that trend over February–April, May import levels were right back on a rising trend line.

Falling exports and rising imports mean a steady rise in the trade deficit and, thus, a steady drag on US factory-sector production. As we have related before here, US factory-sector activity has flagged noticeably this year, driven by weakening in capital spending and exports. The recent data show both of those drags still in place, indicating, in turn, that the weakening trend in factory output is continuing as well.

Manufacturing is not a large enough sector to single-handedly pull the US into recession, but it is large enough that its current stall has imparted a noticeable hit to underlying GDP growth. At the start of the year, we were expecting growth in the 2.0%–2.5% range. The emerging softening in manufacturing has pushed underlying growth as much as a full percentage point lower.

Real Imports and Exports of Goods
Real Imports and Exports of Goods
Source: Census Bureau. As of 31 May 15

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 44 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive email updates as new reports are released.

© Western Asset Management Company, LLC 2021. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.