Economist's Commentary: October 10, 2008

Quick Take on the Economy: October 10, 2008

By Harika "Anna" Barlett, Senior Research Analyst

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that in August exports were at $164.7 billion and imports were at $223.9 billion. The resulting trade deficit was $59.1 billion, down from the revised July value of $61.3 billion. Both exports and imports showed a decline from their record-high July values, by $3.4 billion and $5.5 billion, respectively, while falling oil prices played a part in narrowing the trade gap.
High oil prices caused an 8 percent drop in the quantity of energy-related petroleum product imports, and together with declining oil prices, the dollar value of energy-related petroleum product imports fell by 13 percent.
Decreases in automobile vehicles, parts, and engines, industrial supplies and materials, and consumer goods contributed to the decline in exports, while decreases in industrial supplies and materials, automobile vehicles, parts, and engines, and capital goods caused a decline in imports. Imports of consumer goods and exports of capital goods increased in August.
Compared to August 2007, exports were up $22.6 billion (16 percent), and imports were up $26.4 billion (13 percent). While increasing exports helped the economy grow in a moderate pace over the last several months, this growth in exports seems to be slowing down. However, imports are also declining, and the resulting net exports figure in August is still better than expected.

Exports are slowing down, but they are still at record high levels, and combined with decreasing imports, trade deficit is narrowing. Because the net exports were better-than-expected in August, the economic activity for the third quarter is bumped up a notch.
Consumers are putting off their car purchases. However, this doesn't necessarily mean they may wait for their home purchases. Mortgage loans are still available at historically low rates, and housing affordability is favorable for many potential buyers.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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