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Trade Rebound Unlikely

Trade Rebound Unlikely

Aug. 31, 2023
"A strong dollar and a deteriorating global economic backdrop will restrain exports," says Oxford Economics.

Despite the rise in both imports and exports in July, with larger increases in imports pushing up the trade deficit, Matthew Martin, U.S. economist at Oxford Economics, isn't forecasting the increase to continue. "We do not expect July to mark a sustained rally in trade flows and expect headwinds to strengthen over the balance of the year.

"A strong dollar and a deteriorating  global economic backdrop will restrain exports, while an anticipated sharp downturn in domestic consumption as labor conditions soften and excess saving dry up will hold back imports, with net trade broadly neutral for GDP growth over the second half of the year."

He goes on to explain that the U.S. good trade deficit widened $2.30 billion to about $91 billion in July and that a 1.9% rise in imports was offset slightly by a 1.5% increase to export levels.

"Gains in imports were board-based, with only a drop in industrial supplies restraining the overall increase."

The improvements in exports were concentrated in autos and industrial supplies, with the latter boosted by a rise in oil prices. 

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