Federal Reserve Economic Data

The value of the US dollar can influence trade flows by changing the relative prices of exports and imports. A stronger dollar tends to make imports cheaper for Americans and US goods more expensive abroad, which can put upward pressure on the trade deficit.

In practice, though, the relationship between the dollar and the US trade balance is far from consistent.

Our FRED graph above shows two measures:

• A trade balance ratio, defined as (exports − imports) ÷ (exports + imports), which expresses the US trade position relative to the total value of trade flows.
• An exchange rate measure, which in this case is the trade-weighted US dollar index, which reflects the nominal value of the US dollar against a broad basket of currencies for goods trade.

When we plot these two series together, we see that the relationship varies over time.

• In 2014-16, the dollar strengthened considerably and the trade balance ratio (exports minus imports, divided by total trade) weakened, consistent with the idea that a stronger dollar can reduce net exports by making US goods more expensive abroad and imports cheaper at home.
• In both the 2008-09 recession and 2022-23, the trade balance ratio improved alongside a stronger dollar, suggesting that other forces, such as collapsing import demand during a downturn or shifts in commodity prices, were the dominant drivers.

Trade policy can also affect both the dollar and the trade balance in ways that break the usual pattern.

• The 2018-19 tariff increases on a broad set of imports, especially from China, affected relative prices and sourcing decisions directly. They may have contributed to a stronger dollar through capital inflows, while at the same time reducing certain import volumes.
• In 2025, across-the-board tariffs and targeted increases on specific goods could again influence the trade balance through price and sourcing effects that do not operate primarily through exchange rate changes. They have the potential to shift both import volumes and export competitiveness, sometimes reinforcing and other times counteracting the influence of the dollar.

These episodes underscore that the link between the dollar and the trade balance is not systematic. Exchange rates are just one factor in shaping trade outcomes. Domestic demand, global growth, commodity price swings, and trade policy all play a role. And in recent years, tariffs and other trade measures have been especially relevant.

How this graph was created: Search FRED for and add “Trade Weighted U.S. Dollar Index: Broad, Goods” (DTWEXBGS) to the graph on the left axis. From the “Edit Graph” tab, add “Exports of Goods and Services” (EXPGS) and “Imports of Goods and Services” (IMPGS) as Line 2. To do this, enter the formula (a-b)/(a+b) in the Line 2 tab. Finally, change the starting date to “2006-01-01.”

Suggested by Ana Maria Santacreu.

Does it always feel like your flight is full?

It makes sense that more people experience full flights because there are, by definition, fewer people on less-crowded flights. The other reason is that, yes, flights are indeed mostly full.

Our FRED graph above shows “load factors” for US airlines: that is, the percentage of seats sold.

The red line shows clear seasonal patterns: If you don’t like crowds, avoid flying in June and July and instead fly in January and February.

The blue line shows the same series, but removes the regular seasonal patterns. Here we can see how the load is trending within a year without having to compare with the same month in the previous years. And we see that the de-seasonalized load is fairly constant over time.

Our second FRED graph, below, shows seasonal data for domestic flights (blue line) and international flights (red line). There’s little difference between the two series, except for the period right after the pandemic. In particular, it doesn’t look like there’s much room for airlines to arbitrage between domestic and international flights during the year if the same planes could be used for both.

How these graphs were created: Search FRED for and select one of the load factor series. Click “Edit Graph” and use the “Add Line” tab to search again for the other series. Use the “Format” tab to change the settings of the second line. Proceed similarly for the second graph.

Suggested by Christian Zimmermann.