<p>The Commerce Department announced a 3% GDP growth for Q2 last month, with trade accounting for two-tenths of a percentage point. ;</p>
<p>The trade deficit increased by 0.3% in July to $43.7 billion. This is less than the $44.6 billion economists had predicted, and economists are hoping trade will contribute to economic growth in Q3. ;</p>
<p>More data from July:</p>
<ul>
<li>Crude oil exports hit a 3-year high</li>
<li>Exports of civilian aircraft increased by $1.1 billion</li>
<li>Imports of meat and veggies reached an all-time high of $11.7 billion</li>
</ul>
<p>Overall, exports of goods and services dropped 0.3% to $194.4 billion and imports of goods and services dropped 0.2% to $238.1 billion. ;</p>
<p>This was all good news for Q3 until Hurricane Harvey smashed into Texas, and economists are now saying the hurricane&rsquo;s aftermath could push the trade deficit up in September. ;</p>
<p>&ldquo;The US economy carried a little more momentum than originally thought,&rdquo; says BMO Capital Markets economist Jennifer Lee. &ldquo;However, some of that momentum will be blunted by, for starters, Hurricane Harvey.&rdquo;</p>
<p>Despite the small increase in July, the deficit is still running 10% higher when compared to last year. A larger deficit subtracts from gross domestic product (GDP), which is considered the official &ldquo;scorecard&rdquo; of the economy.  ;</p>
<p><strong>Foreign Deficits ;</strong></p>
<p>The trade deficit with China hit an 11-month high in July ($33.6 billion), giving President Trump more fuel for his argument that the ongoing deficit has destroyed factory jobs in the US and stunted our economic growth.  ;</p>
<p>Exports to China increased by 3.5% in July and imports increased by 3.1%.</p>
<p>Exports to the EU decreased by nearly 10% in July and imports dropped by 3.7%. The trade deficit with the EU climbed 7.9% to reach an 8-month high of $13.5 billion.</p>
<p>The deficit with Germany remained unchanged at $5.5 billion. ;</p>
<p>The trade gap with Mexico dropped from $6 billion to $4.9 billion. ;</p>
<p><strong>August ;</strong></p>
<p>The US services sector, which represents more than two-thirds of our economic activity, showed strong gains in employment and new orders during the month of August. The government claims we ;created 156,000 new jobs in August, with a measure of services sector employment jumping 2.6 points. ;</p>
<p>The Institute for Supply Management (ISM) reports that its non-manufacturing activity index rose 1.4 points in August, recovering from an 11-month low in July. ;</p>
<p><strong>Trade Deals ;</strong></p>
<p>The Trump Administration is seeking to curtail longstanding deficits by renegotiating trade deals. Trump has already promised to renegotiate NAFTA, a trade deal with Canada and Mexico. More recently, he has threatened to pull out of a free trade deal with South Korea. ;</p>
<p>&ldquo;When you negotiate with countries, keep in mind you are really going up against some of the biggest corporations in America who moved their operations overseas years ago,&rdquo; explains MUFG economist Chris Rupkey. &ldquo;This deficit concern is somewhat misguided as it is largely a trade war with ourselves. These jobs are not coming back to America&rsquo;s heartland.&rdquo; ;</p>
<p>Rising consumer spending and increased business investment are drawing in more imports. In other words, our economy ;is improving so we are buying more stuff. This is a good sign from an economic standpoint, but we need to get our trade deficit down and increase our exports.</p>
<p>A large trade deficit tends to slow economic growth, because Americans are purchasing more goods from overseas than from the US. A large deficit is also bad because it means other countries own a lot of America. ;</p>
<p>This is a difficult problem to solve considering the main reasons people buy foreign-made products: 1) Our economy is stronger than others and 2) The goods people need are no longer made in the US.</p>
<p><strong>Editor&#8217;s note:</strong> Actually we could wipe out most of the trade deficit with the right strategy on energy. Take a look at the link below. If you are curious &#8211; BUY IT!</p>
<p> ;</p>
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