Supply side shock of COVID-19 evident in trade figures

The trade gap shrunk to $39.9 billion in February as supply-shocks of COVID-19 pulled imports down. Of the $6.3 billion drop in imports, $3.7 billion came from capital goods in its biggest monthly drop since 2001.

Imports Down a Lot, Exports Down a Little

• Nominal imports fell $6.3 billion with goods imports accounting for about $5 billion of the drop and the remaining $1.3 billion coming from a decline in the much smaller services imports.

• Nominal exports slowed too, but not nearly as much as imports did. On the export side, services were lower by $1.7 billion. Remarkably, exports of U.S. goods actually rose in February, up $952 million, but not enough to offset the drop on the services side.

Goods Imports Lower on Drop in Capital Goods

• Recall that in February, COVID-19 was still a bigger problem abroad than it was in the United States.
  
  Supply chain disruptions were likely a factor behind the $1.6 billion drop in industrial supplies and the $3.7 billion decline in capital goods imports. For capital goods imports, that decline was 6.7% the largest one month drop since 2001.

• No wonder factories are facing long waits for supplier deliveries.

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