Main takeaways:
  • Net exports likely to be a drag on growth again.
  • US exports are not losing market share, despite dollar strengthening that started mid-2014.
  • Weak US exports more likely reflect sluggish global trade.

Trade results for October, if repeated in the next couple of months, would lead to a material drag in Q4 growth again. Note, however, that periods of consistent drag from net exports were also observed in the 1997-2005 period -- see chart.

Imports are growing at a strong pace and exports collapsed in the turn of the year and remained roughly flat since then.

The jump in import growth precedes the stronger USD and coincides with an upturns in job creation and consumption that happened in 2014 -- therefore not likely to be a strong consequence of the currency strength and import substitution (although it may play some role).
The slowdown in exports, however, happened at the turn of the year, and therefore could potentially be a quick response to the strenghtening of the dollar that started in mid-2014.

However, the chart below shows that US exports are moving roughly in tandem with world exports...yes US exports relative to world exports dropped since the start of 2015, but the relative level is only 1.5% below the trend since the crisis. This means that the recent strengthening of the dollar is not causing a loss of US market share in world (volume) exports.
Of course it could be just a matter of time for US exports to shrink relative to world exports, but the recent weak performance seems more likely a result of sluggish world trade rather than dollar strength.

Meanwhile, the ISM export orders do not suggest any upside in the near term.