The trade deficit widened in June 2011 by 4.4% while both imports and exports fell, signaling a decline in the US economy in the final month of the second quarter.  According to the Bureau of Economic Analysis, the damage was entirely on the goods side of the ledger:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total June exports of $170.9 billion and imports of  $223.9 billion resulted in a goods and services deficit of $53.1 billion, up from $50.8 billion in May, revised.  June exports were $4.1 billion less than May exports of $175.0 billion.  June imports were $1.9 billion less than May imports of $225.8 billion.

In June, the goods deficit increased $2.1 billion from May to $67.6 billion, and the services surplus  decreased $0.1 billion to $14.5 billion.  Exports of goods  decreased $4.1 billion to $121.2 billion, and imports of goods decreased $1.9 billion to $188.8 billion.  Exports of services  remained virtually unchanged at $49.6 billion,  and imports of services remained virtually unchanged at $35.1 billion.

The goods and services deficit increased $6.2 billion from June 2010 to  June 2011.  Exports were up $19.5 billion, or 12.9 percent, and imports were up $25.7 billion, or  13.0 percent.

The AP notes that the decline in exports was the largest in two years, and that it deals a blow to hopes that foreign demand can help rescue the American economy:

The Commerce Department says the deficit rose 4.4 percent to $53.1 billion in June, the largest imbalance since October 2008. Imports fell 0.8 percent to $223.9 billion as crude oil prices fell for the first time in nine months. Exports dropped 2.3 percent to $170.9 billion, the biggest decline in more than two years.

The drop in exports, the second in a row, was a blow to hopes that rising overseas demand will boost the fortunes of American manufacturers in the face of a slump in spending by U.S. consumers.

In two weeks, the Commerce Department will issue its first revision to the advance Q2 GDP figure, initially reported at 1.3% annualized growth.  This report on exports and imports appears to indicate that the revision will be downward — and I wouldn’t be surprised to see it go sharply downward.

The US got slightly better news from the latest report on initial jobless claims, which declined 7,000 from last week to 395,000:

In the week ending August 6, the advance figure for seasonally adjusted initial claims was 395,000, a decrease of 7,000 from the previous week’s revised figure of 402,000. The 4-week moving average was 405,000, a decrease of 3,250 from the previous week’s revised average of 408,250.

Reuters was pleased by the results:

New U.S. claims for unemployment benefits dropped to a four-month low last week, government data showed on Thursday, a rare dose of good news for an economy that has been battered by a credit rating downgrade and falling share prices.

Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the Labor Department said, the lowest level since the week ended April 2.

Economists polled by Reuters had forecast claims steady at 400,000. The prior week’s figure was revised up to 402,000 from the previously reported 400,000.

In the last four weeks or so, the plateau has improved from a 420K range to a 400K range.  That’s not a big shift, and it’s still above the 380K range of Q1, but it’s at least going in the right direction.  Interestingly, Reuters has stopped peddling the 400K myth:

The four-week moving average of claims, considered a better measure of labor market trends, slipped 3,250 to 405,000. Economists say both initial claims and the four-week average need to drop close to 350,000 to signal a sustainable improvement in the labor market.

Actually, that should be 325K, as I showed at the link above last June, but Reuters’ figure is a lot closer than they’ve come in the last few months.  It took three or four weeks at the 400K range to disprove the myth, apparently.