February's trade results provided more mixed messages on the path of the recovery. The U.S. trade deficit actually declined slightly during the month, which is a positive sign. But that occurred while both imports and exports fell. Overall, this report from the Bureau of Economic Analysis isn't a clearly positive sign for the direction of the global economy.
Before getting into the numbers, here's the historical chart on trade:
Let's start at the bottom. The trade gap (purple line) was a little smaller in February. It declined by $1.2 billion to $45.8 billion. Generally, economists herald the trade deficit shrinking as a great sign. In this case, however, we can't get too excited about the change.
That's because both imports and exports also declined. Imports declined more than exports, which explains why the trade gap also fell. In February, exports declined $2.4 billion to $165.1 billion. Meanwhile, imports dropped $3.6 billion to $210.9 billion.
This may signify a decline in demand, both domestically and globally. If that's the case, then the economy will have even more difficulty recovering. At least domestically, this didn't appear to be the case, as sales soared in February. But there's another possible explanation for the decline in trade activity: perhaps rising fuel prices drove up freight costs and persuaded people to spend more domestically, instead of obtaining goods from abroad.