The nation's trade gap, the difference between the value of what this country imports and what it exports, fell modestly in May, dropping from an upwardly revised $50.6 billion in April, to the May deficit of $48.7 billion. Originally, the April shortfall had been estimated at $48.7 billion. The May deficit was in line with expectations, with the moderate narrowing in the imbalance largely the result of falling oil prices during that month.

Specifically, oil prices receded in May, after spiking earlier in the spring, as concerns about the health of the floundering global economy began to outweigh concerns of a geopolitical nature, which had largely centered on Iran.

As for imported oil prices, they fell by $2.03 a barrel in May, to just under $108. That lowering of the average price of oil helped to lessen the ultimate cost of energy imports, even as aggregate volume rose modestly for that month.

Meanwhile, our trade with China rose some six percent, to more than $26 billion. Trade with that nation, the second largest economic player in the world, has become a political issue in this country, and could play a role in the upcoming Presidential election. Our trade deficit with the euro zone also increased in May, although trade with that region remains much smaller than it is with China, and is thus not a political issue of much note.

On the whole, our large deficit has not done much to limit GDP growth, as estimates suggest that just a tenth of a percentage point of the first quarter's tepid 1.9% GDP growth came off because of the trade gap. Overall, the trade imbalance remains a worry, but does not figure to be a game changer as far as the overall economic outlook is concerned. For now, we continue to believe that growth in the just-concluded three months was probably a bit less than 2%. GDP results for the period are due out late this month.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.