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US Reports Bigger Than Expected February Trade Deficit, May Spur GDP Estimate Cuts
Obama's plan to spur US exports sure is starting with a bang. After reporting a $40 billion trade deficit in January, the US once again was a net importer (no surprise there) to the tune of $39.7 billion. This is worse than the $38.5 billion consensus. Both import and export prices increased by 0.7% (with an import price consensus of +1.0%). The largest deficit increase was in the consumer goods category, which increased by a sizzling 3.1% as everyone is stockpiling Kindles and iPads for that moment when the irresistible force of the US budget deficit finally meets the immovable object of reality (which lately has been quite movable). The next question: with China now also a net importer, and joining such illustrious peers as the US and EU, just who is exporting?
Here are the key observations on the number via Goldman, which now anticipates the need for a GDP estimate reduction as a result. That's ok, we are sure the administration will promote legislation to the GDP equation that will make net imports actually a GDP positive.
MAIN POINTS:
1. Both the widening reported for the trade deficit in February and the composition of it were in line with our expectations, as imports rose 1.7%. The increase was widespread across categories but particularly noteworthy for consumer goods (+3.1%). Meanwhile, exports rose only 0.2% in February following a similar setback in January.2. At the margin, the widening in the trade deficit implies an additional slight downside risk to our 2.5% estimate for real GDP growth in Q1. However, we expect the retail sales figures due for release tomorrow to show strong gains in March.
3. Import prices rose somewhat less than expected by most analysts in March. While estimates of prices ex petroleum are not released, it's probable that this is where the surprise occurred, as that index was down 0.2% on the month. Some softening was likely due given the generally firmer trading of the dollar since the beginning of 2010, but it's doubtful forecasters had penciled in a decline.
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Simple, just reclassify 'jobs' and 'debt' as exports and we have this problem knocked. Do I have to think of everything?
Don't forget inflation as an export, we are the world leader.
The Greek government stimulus measures last year were deemed a failure as it brought an increase in the trade deficit, but the US is special, because of the world's insatiable appetite for Treasuries, so all is well, nothing to worry about...
Welcome to the Pleasure Dome, Logan's Run circa 2010. When in doubt, go shopping. When you're feeling lonely and sad, go shopping. If our country is attacked, go shopping. Seriously, we've created a modern American society of hamsters living inside a Skinner box. Just press the button (go shopping) and life sustaining sustenance will be dispensed (material goods for the happiness of your soul).
Welcome to the Pleasure Dome:
http://www.youtube.com/watch?v=_c01OpiCvoM
The world is my oyster!
Politicians should use the "Thunder dome" or at least when the "bust a deal, face the wheel". I must admit, this is an elegant solution over my more expensive shark tanks.
My button says, 'silver, snitches'.
Barack: I don't get it, all the money went overseas. Barack Advisor: Sir that is where they actually make things.
+1
Tyler--
This China surplus thing, while relevant, needs to be viewed based on the historical performance in Chnia in March. Its the lunar new year and March is traditioanlly a low point in exports. Not to say it isn't important, but I worry that you are overplaying it.
Ummm, March s/b a month where they are shipping summer goods heavy..one month on the water and another month to get the goods out of the US wharehouses and into to their ultimate storefront destinations by May..I don't buy your theory that March is a light shipping month..think about summer goods getting into stores in time for summer.
I'm not an expert on Chinese trade, but I don't think thats correct. In any event, lets wait till we see April.
You don't need to be an expert on Chinese trade to understand my point..its simple logistics.
the deficit just shows that the Chinese government is carrying the load of the Chinese economy. (Think of all the empty infrastructure such as highway, railroad and housing)
At what point do they simply dispense with attempting to connect the public numbers with the data?
And while I'm on this topic, at what point will the Supreme Court dispense with attempting to root their opinions in the Constitution?
[I can't see signatures, including mine. Is that an option somewhere? Can't find it.]
"[E]veryone is stockpiling Kindles and iPads for that moment when the irresistible force of the US budget deficit finally meets the immovable object of reality."
Bahaha!
"[W]e are sure the administration will promote legislation to the GDP equation that will make net imports actually a GDP positive"
True, haha, true.
The Political Reality of the Centralized Redistributory Planned Economy in all its Triumphant Splendor.
Probably Greece
O.K., so the U.S. trade deficit is expanding and China has a trade deficit, sooooo who has the surplus, Kyrgyzstan? Have we all gone mad, why does anyone treat trade figures with sanctimonious reverence anymore? I suggest a dose of scepticism might be in line here.