The US economy is continuing to grow: Exports and modest imports—both indicators of economic expansion—reduced the trade deficit by 17.6% in October versus September.
The United States' trade deficit fell by $14.3 billion to $67.1 billion in October, its lowest level since April. Exports increased by a record 8%, while imports increased by less than 1%. Both export and import volumes reached all-time highs, and both export and import volumes hit new peaks.
According to Mahir Rasheed, a professor at Oxford Economics in the United States, the banner exports figure may be attributable to slower export activity in September, when the Delta variant exacerbated supply chains. More than one-third of the $16.8 billion boost in exports in October came from industrial supplies and materials, according to the US Bureau of Economic Analysis.
A country's trade balance is not always an indication of its economic viability. According to Rasheed, the widening trade deficit in the US during recent decades has a lot to do with globalization.
Rasheed explained, “We're importing a lot more nowadays. But what that means for average Americans is that the amount of money they're spending on average items like electronics or other types of consumer goods has come down a lot, because companies that are paying lower labor costs can actually pass the savings on to consumers."
Rasheed is interested to see whether the Omicron variant has an influence on global trade. When Covid initially wreaked havoc on economic growth, supply chains, weddings, and people's lives, the government readily gave out stimulus—something policymakers are hesitant to do now that prices are high. And with many countries still struggling to immunize their population, we could see a repeat of Delta's dampening effect on supply chains.