By SBE Council at 10 December, 2024, 7:59 pm

by Raymond J. Keating -

International trade is critical to the U.S. economy, including during the Christmas holidays.

Unfortunately, the latest report on U.S. trade estimated that U.S. exports (seasonally adjusted in nominal dollars) in October declined by 1.6 percent. That was the second consecutive month of decline. And the October level of $265.7 billion was effectively the same as June's $265.3 billion.

As for imports, they also declined in October by 4.0 percent. October's imports of $339.6 billion came in just above June's level of $338.9 billion.

Trade has largely been stagnant in recent years, serving as a drag of U.S. economic growth. For example, since 2007, growth in real annual exports averaged 2.9 percent, versus the post-WWII average of 4.8 percent. And on the import side, real annual growth since 2007 averaged 2.6 percent versus the post-WWII average of 5.9 percent. At the same time, real annual GDP growth averaged only 1.9 percent since 2007 compared to the 3.2 percent average from 1948 to 2023.

Import expectations also provide an outlook for holiday season sales. And of course, it needs to be kept in mind that nearly all imports are inputs to U.S. domestic businesses, including retailers. In turn, U.S. businesses are overwhelmingly small, including 98.5 percent of retail trade employer firms having fewer than 100 workers.

Reuters reported last month:

"D.A. Davidson analyst Linda Bolton Weiser said the consumer environment this year is 'far from robust' and that Walmart's average price point for toys is at $40.16 this season, 10% lower than last year. All U.S. companies - including retailers Walmart, Dollar General (DG.N), opens new tab and other stores - shipped in about the same amount of Christmas-related products by weight this year as in 2023, and at least 20% less by weight versus 2022, according to ImportYeti. In the 12 months to Sept. 30, 2024, U.S. companies imported about 141 million kilos' worth of product described as 'Christmas' items in bills of lading - filings that companies must submit when imports are brought in to the country. In the same period in 2022, companies imported about 180 million kilos of Christmas goods, or 22% more than this year."

The export and import declines in October and the import orders from retailers do not speak well for fourth quarter GDP growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist , The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist .

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