Trade Deficit In Goods Higher

Amid the unfolding of tariff effects, exports are moving in the wrong direction and look to be a big negative for third-quarter GDP. The nation's trade deficit in goods was a whopping $75.8 billion in August with exports down 1.6 percent for a second straight month. Imports are also a negative for the trade balance, up 0.7 percent following a 0.9 price rise in July.

Exports of agricultural products plunged 9.5 percent in August to $11.9 billion which is on top of a 6.3 percent monthly drop in July. Exports of industrial supplies were also very weak, down 5.9 percent to $43.8 billion, while exports of vehicles fell 2.8 percent to $12.7 billion. These offset a really good showing for consumer goods which rose 10.3 percent to $17.6 billion. Capital goods, which are the nation's strongest exports, rose 0.3 percent to $46.5 billion.

The import side shows a 3.2 percent rise in vehicles to $31.7 billion with consumer goods, which is the nation's sore point for trade, up 1.3 percent to $53.3 billion. Imports of capital goods fell 0.9 percent to $57.6 billion which is a positive for the balance but a negative for business investment. Imports of agricultural products fell 1.2 percent to $12.3 billion.

The monthly goods deficit has been larger but not by much, eclipsed only by $76.0 billion in February this year. The monthly average so far in the third quarter is $74.0 billion vs $67.6 billion in the second quarter -- this points to a major drag for net exports in the GDP report, one offset however by a strong build underway for inventories in other data released this morning. Country balances aren't posted with the advance report but will follow with next week's international trade report that will also include services.