Trade Deficit Surges, Hits $50.2 Billion, On Expectations Of $44.1 Billion, Major Downward Revisions To Q2 GDP Coming

Tyler Durden's picture

When we reported on the record surge in Chinese exports over the weekend we said that "the official read of the US trade deficit which will be reported on
Tuesday, will almost certainly spike, pushing GDP expectations lower yet
again." Sure enough, the US May trade deficit just exploded to $50.2 billion, far above the consensus of $44.1 billion, and much worse than April's revised $43.6 billion. Imports, not surprisingly, surged to an all time high $225.1 billion with exports lagging, even despite the relatively weak dollar in May, which declined modestly to $174.9 billion. From the report: "The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total May exports of $174.9 billion and imports of $225.1 billion resulted in a goods and services deficit of $50.2 billion, up from $43.6 billion in April, revised. May exports were $1.0 billion less than April exports of $175.8 billion. May imports were $5.6 billion more than April imports of $219.4 billion." Accoding to Bloomberg's Brusuelas, the key culprits were petroleum and industrial supplies. For those wondering what America exports and imports: "In May, the goods deficit increased $6.7 billion from April to $64.9 billion, and the services surplus increased $0.1 billion to $14.7 billion." So why do people care about the manufacturing CPI again? Bottom line: the bean counters will now be forced to revise their Q2 GDP forecasts well lower. And while Q2 is now a scratch, the problem is that this weakness is now continuing into Q3.

Visually:

Full report here.

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Harlequin001's picture

Just a quick one WoodMizer, how do you know about old threads if you are new to the site?

WoodMizer's picture

I will admit I lurked since 2008; I was Laid off as a shop foreman in a cabinet shop, when real estate was kneecapped.  I have spent most of my down time since 2008 taking a crash course in Austrian school econ.  I became a member of the ZH community because I wanted to be able to ask some rather simple questions of an educated group.

MachoMan's picture

Expensive oil and many other events are not the cause per se, so much as the straws that broke the camel's back so to speak...  for example, a resilient populace (with savings) could have better withstood expensive oil and other increases in the cost of living.  In many respects, these issues are more accurately described as symptoms of cheap credit/devaluation of our currency...  (obviously at some point purchasable oil runs out, but it didn't in 2008 and this wasn't the predominant issue).

The real issues are decades of offshoring combined with a desperate attempt to paper over the problem and then an even more desperate attempt to create financial instruments and means to stuff a bandaid on the failed paper-over...  the expansion of the size and scope of governments at all levels being a glaring example (picking up the slack of the private sector)...  and their capture by those hell bent on ensuring the rest of us have to bow before breathing.  Ultimately, this has created a hole so big even god could not fill it (especially when "he" doesn't exist) and we are impotent to collectively deal with the problem, given the respective position of stakeholders and our form of government.  Like virtually all personal deleveraging to date, the only way we'll collectively deleverage is if forced.

In short, I think you might say that the boom post WW2 was more of a transitionary event than fixture...  and eventually wage arbitrage won't have such an easy time...  but until that day, we're going to experience decreases to our standard of living.  And there is no end in sight...  [even if the system resets...  even if we adopt stronger money principles...  we have to come to grips with the world economy and structural unemployment, unless of course a few billion people die off...  (which is the desire of some...  assholes)].

PS, don't worry about timing the market...  it's a fool's errand and odds are you'll be wrong...  and being wrong, even by a little, can bite you.  Convert your currency out of the ether and convert to the new currency regime once it fires up...  just remember, some assets depreciate more quickly and/or have less utility than others. 

Marco's picture

Why do we need unemployment? If we don't let people starve we have to spend money on them, or in other words wealth redistribution ... if we're being socialist why not create non oil consuming service jobs for them or spread the work around more? (Shorter working hours.)

WoodMizer's picture

Thanks for offering your synopsis.

Are you saying that since WW2 the industrialized world has been living beyond their means?

 

MachoMan's picture

I'm saying america certainly has...  but, if truth be told, the event horizon was probably long before that...  there are fundamental aspects of our lives that will never be sustainable, despite however cleverly they may be disguised due to rampant credit, currency devaluation, or demographic factors...  people see wage arbitrage as some sinister plot...  I just see it as the unveiling of unsustainability.  [as trav points out, the sinister plot is more told in what is done with the residual from utilizing wage arbitrage, e.g. bonuses for the top].

WoodMizer's picture

I will admit I lurked since 2008; I was Laid off as a shop foreman in a cabinet shop, when real estate was kneecapped.  I have spent most of my down time since 2008 taking a crash course in Austrian school econ.  I became a member of the ZH community because I wanted to be able to ask some rather simple questions of an educated group.

WoodMizer's picture

I will admit I lurked since 2008; I was Laid off as a shop foreman in a cabinet shop, when real estate was kneecapped.  I have spent most of my down time since 2008 taking a crash course in Austrian school econ.  I became a member of the ZH community because I wanted to be able to ask some rather simple questions of an educated group.

augie's picture

Good for you in taking an active interest in the systemic causes of your unfortunate loss of employment. If everyone who was affected by the 08' collapse maintained a similar character to yours, i would contend we would be in a much better place right now.

WoodMizer's picture

Thanks for the support.

One of the most challenging problems I face is convincing the older members of my family (60 and over), to diversify into PMs.

I graduated in 2006 with a BS in Biology, as a result my family considers me ignorant concerning macro economics.

 

I want to spread the ZH message, but the masses lack the prerequisites for understanding the importance of ZH articles.

MachoMan's picture

Don't have such a contempuous view of the "masses"...  everyone is perfectly capable of understanding virtually all the major issues...  I'll posit that we're incentivized, whether extrinsically or intrinsically, to ignore the issues and/or create an alternate reality.  The trick to getting them to see the light so to speak is to break through the protective barriers...  and stay after them... 

Hugh_Jorgan's picture

You got that right.

I call it "trying to have a 5th floor conversation with someone who is too lazy walk up beyond the 2nd floor."

Don't waste your time. If you care about them them, then prep enough for them as well as yourself. Otherwise, just let them go if they won't listen.

ElvisDog's picture

In my opinion, the collapse of 2008 was caused by the fact that our economic system relies on an ever increasing level of debt and leverage and (before the government jumped in with both feet) in 2008 private sector debt reached saturation. The collapse itself was caused by a panic reaction to that realization. Basically, the players realized the Titanic had hit an iceberg and rushed for the lifeboats all together.

Harlequin001's picture

Without 3 trillion in brand new dollars, not to mention Euro's, Pounds and Yen, it did collapse.

utterly...

Silver Dreamer's picture

TPTB have kept the ponzi scheme going this long.  What's a few more months then?  Prepare for the day your money buys nothing.

slaughterer's picture

The algos are pushing the futures up to get a better ask on the open of the regular market, or somebody has a private relation with LaGarde and just got some inside info on Greece and Italy, today's toxic twins. 

SheepDog-One's picture

I wouldnt bet on it myself, but throw down your chips have fun.

monopoly's picture

Trading this market day to day is for the chronically ill person. Down, up, down. Just sitting here with my stash and miners.

Franken_Stein's picture

 

I don't want to spoil your party.

 

BUT

 

What about the nuclear power plant at Fort Calhoun that is currently under water ?!

There is rumour about a meltdown.

A no-fly zone has been put in place as well as a total news ban.

Incommunicado.

 

SheepDog-One's picture

Oh Franken nevermind all that, what are you busting out of the Matrix or something? Only thing that matters is STOCKS, and BTW have you eaten your peas yet?

sabra1's picture

what about japan, the mideast, pakistan etc. news stations are handed what news to report on, no investigative news allowed. what you do not hear, does not exist!

earnulf's picture

....ravenous bugblatter beast of Troth, which assumes that if you can't see it, it can't see you

Hitchhikers guide.

Silver Dreamer's picture

The axiom that the news you are not told is often what is most important remains true.  What is the "news," as you are provided it, after all?

Coast Watcher's picture

Geez, Frank, time to stop flogging that horse. A new barrier has already been installed around the plant and they're pumping it dry as we speak.

http://www.therepublic.com/view/story/50f41892dc5b4c12a6dd962b9de5c916/N...

My wife is currently in Omaha, and the news this weekend had new video of the plant showing all the important areas are dry and safe and have been all along. No meltdown since the pumps for the spent fuel pool are still working and the reactor core itself has been shut down for months for refueling.

Hugh_Jorgan's picture

The plant was already in cold-layup since April, well before the floods hit. They are good to go.

 

A VERY different scenario than Japan who was running high and hot when the quake happened. Controlling the reactor immediatley after a scram without electrical is a guaranteed disaster if you have no sustainable emergency means of removing heat. This is why they suffered meltdowns.

djsmps's picture

After looking at the futures, I had a vision of a couple of guys high-fiving it yelling, "Excellent. Highest in three years!"

Caviar Emptor's picture

Naz was already at all-time record highs two months ago. People keep forgetting 

Caviar Emptor's picture

NYSE data from last quarter shows trading volume is 75% 'program trading' (Bots), 15% daytraders and only 10% 'investors'. That's a tell. It means that market valuation is a reflection of Fed liquidity provided to Wall Street, not a reflection of the economy or the health of corporate America. US economy is still over-financialized and that vicious cycle will continue to feed on itself.

spanish inquisition's picture

Did we actually import an extra $50B in goods or was it the same amount that just costs more?

Caviar Emptor's picture

It's all measured in dollars, not dry weight. 

The trade gap jumped 15% compared with April. Exports shrank and imports grew in terms of dollars. Clearly we're getting less at higher prices

SheepDog-One's picture

What 'goods'? What do we make and export anymore?

Harlequin001's picture

9 mil, 7.62... and a few cars I think...

but maybe they're made in China...

Twinkies...

poor fella's picture

One plane and a shitload of soybeans. Work at the soybean factory has really picked up!

Harlequin001's picture

Coca Cola...

or is that made in China too?

Zero Govt's picture

and airfreight pallets of US Dollars to keep all those corrupt despots and US puppet Govts propped up abroad ..."bringing democracy to the world" ...just great wholesome stuff

monopoly's picture

I cannot believe that the brainless executives of the idiot channel allow Cramer on before lunch. He is so obnoxious, so clueless as to make me go to Bloomberg and Betty. I stopped watching this channel over 2 years ago except for the morning Santelli and Mark Haines, now that Mark is gone :(, with Cramer on it is just impossible to watch except on mute.

What a waste. Who the hell is in charge of this fraud.

monopoly's picture

Looks like a good day to do nothing.

SheepDog-One's picture

Equity markets are now just a Treasury full-retard game....never trade full-retard.

RobotTrader's picture

High flyers like NFLX, AAPL, etc. are green this morning as they are trying to U-turn stocks to burn the late shorts.

Meanwhile, silver continues to get smashed, but now it is being dragged up kicking and screaming with the bounce in ES.

SheepDog-One's picture

Gentleman Jim sending Momo a blood puke bucket.

lieutenantjohnchard's picture

meanwhile, as the robotard likes to bray, std continues to get smashed. std, for those who care, was the 'tard's number one pick from december 2010. it's down 20%.

Stuck on Zero's picture

You can bet that U.S. manufacturers who haven't already moved to China are rushing there now.  They want to get in before the Renminbi skyrockets against the dollar.

Quinvarius's picture

we must have run out of gold to export.

 

 

 

John Law Lives's picture

Massive monthly trade deficits...

Massive annual budget deficits...

Massive federal debt level...

Massive outsourcing of American jobs and downward pressure on wages...

Massive debasement of US dollar through money printing...

Great job, elites!  The experiment has failed.