Trade Activity Forecast: A Good Year for Exports

Flexport’s Trade Activity Forecast augments traditional economic techniques for predicting U.S. merchandise imports and exports with Flexport’s proprietary data. In the latest update, which extends from August to January 2024, we project overall real imports to be 2.5% below the full year 2022 by the end of December, but real exports to be 3.8% above last year. Exports are being led by growth in autos, which will be up 14.2% from 2022. Consumer goods imports are projected to fall 8.8% this year.

The Methodology: The Flexport Trade Activity Forecast combines traditional economic statistics alongside Flexport’s proprietary data and analysis to generate a forecast of US merchandise import and export trade growth. The use of additional data has been particularly important since the advent of the pandemic and resulting shift in trade patterns away from historic averages. See our primer report for more details.

Update September 18, 2023: The central version of Flexport’s Trade Activity Forecast presented here is a balance of payments version with seasonal adjustment (BOPSA) and correction for inflation. This best answers the question of whether this sector of the economy is performing better or worse than one would expect for a given time of year. The website also offers a Census, non-seasonally adjusted version better suited for users looking for a guide to activity within supply chains on a short-term basis. When adjusting for inflation, this captures the unadulterated forecast of how many goods are expected to cross U.S. borders compared to a year earlier.

Fig. 1 - U.S. Exports Head for an Up Year

Figure 1 shows both real and nominal values for imports and exports, dating back to the start of 2019. The nominal (fainter) figures mostly serve to illustrate how misleading unadjusted numbers can be. We’ll focus here on the real (solid) values.

Our current forecast is for real imports to continue to see only minor monthly variation heading into the fall, ending the year 2.5% below 2022. They will total $2.7 trillion. Exports are projected to dip 0.2% month-on-month in August but grow 1.3% per month on average for the rest of the year and be 3.8% above last year’s levels at $1.7 trillion.

The implied negative net export balance (aka merchandise trade deficit) is now expected to be $253.1 billion in Q3’ 23 in real terms, a revision from our previous forecast of a $236.7 billion deficit. In Q4 we forecast a deficit of $238.4.2 billion, a revision from $216.2 billion. For the year, we now project a negative balance of $1.0 trillion.

Fig. 2 - Auto Imports Still a Driving Force

Overall real U.S. imports (the dark, thick line in Fig. 2) are forecast to end the year 2.5% lower than 2022. Auto imports will still see the strongest year-on-year growth, even after a somewhat volatile stretch of months that will see a month-on-month drop of 2.0% in September and 1.3% in November. Our forecast for the year has been revised down one percentage point to 13.0%.

We’ve also revised our full-year forecast for consumer goods imports to a 8.8% year-on-year fall from the previous 10.6%. October will see 1.1% month-on-month growth. Otherwise it’s still mostly declines. Total imports for the year will be $743.2 billion.

Fig. 3 - Exports of Autos and Consumer Goods Bright Spots

Figure 3 conducts the same exercise for exports. In contrast to our import forecast, we project that U.S. exports will be up 3.8% year-on-year by December (i.e. for the full year). This is a downward revision of 0.2 percentage points from our August forecast.

Auto exports remain the standout. Even though we project month-to-month volatility through to the end of the year – with a drop of 7.5% in August and gains of 4.4% and 2.6% in October and November – they will still be 14.0% last year, an upward revision of 4.5 percentage points from our previous forecast (note that this forecast is based entirely on ongoing trends, not on any forecast for labor relations in the auto sector).

The increases in the other categories will be smaller. Capital goods exports will be 0.9% above last year, though on a downward trend throughout the fall into the winter months. Exports of industrial supplies will be 1.3% higher, seeing month-on-month increases in October and November before dropping 2.4% in December.

Food exports will be down 6.4% year-on-year, but we do see a strong December with 3.8% month-on-month growth, bringing values closer into line with exports in the spring.

The U.S. Bureau of Economic Analysis will publish August data on October 5, 2023. Data for September will be released on November 7, 2023. The next update of the Flexport Trade Activity Forecast is scheduled for October 17, 2023.

Please direct questions about the Flexport TAF to economics@flexport.com.

Disclaimer: The contents of this report are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This report has been prepared to the best of our knowledge and research; however, the information presented herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report.

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