Q1 GDP To Tumble As Trade Deficit Surges Most Since September

Tyler Durden's picture

So much for those already abysmally low Q1 GDP forecasts. Moments ago, the Census Bureau released trade data for February which crushed expectations of an improvement from $39.1 billion (revised to $39.3 billion) to $38.5 billion, and instead rose 7.7% to $42.3 billion, the highest monthly trade deficit since September. This was driven by a 0.4% increase in imports to to $231.7 billion offset by a drop in exports of 1.1%  to $192.5 billion. The goods deficit increased $2.2 billion from January to $61.7 billion in February; the services surplus decreased $0.8 billion from January to $19.4 billion in February.

The breakdown of imports and exports:

Exports of goods and services decreased $2.0 billion in February to $190.4 billion, reflecting a decrease in exports of goods. Exports of services were nearly unchanged.

  • The decrease in exports of goods mostly reflected decreases in industrial supplies and materials and in capital goods that were partly offset by increases in consumer goods and in other goods.
  • Exports of services were nearly unchanged. Increases in other private services, which includes items such as business, professional, and technical services, insurance services, and financial services, and in royalties and license fees were mostly offset by a decrease in passenger fares.

Imports of goods and services increased $1.0 billion in February to $232.7 billion, mostly reflecting an increase in imports of services. Imports of goods also increased.

  • The increase in imports of services was mainly accounted for by an increase in royalties and license fees, which included payments for the rights to broadcast the 2014 Winter Olympic Games.
  • The increase in imports of goods mostly reflected an increase in automotive vehicles, parts, and engines. Capital goods decreased.

Perhaps all those impressed by America's energy independence will be curious to know that the trade deficit excluding petroleum imports was $22.4 billion, in other quite a bit in total energy imports despite the shale boom, which according to some has peaked already. Some other energy trade related data:

  • Feb. non-crude petroleum imports narrowed to $5.7b from $5.9b m/m; 22.8% of total petroleum imports
  • Crude oil imports averaged 7.590M b/d in Feb. compared to 8.275M b/d in Jan.
  • Oil imports from OPEC rose to 45.6% of the total
  • Oil imported from Canada and Mexico was 46.2% of total in Feb. vs 46.9% in Jan.
  • Petroleum deficit in real dollars at $11.9b in Feb.
  • Petroleum exports fell in real dollars to $6,312b in Feb. after $7,151b in Jan

Finally, and most amusingly, in the breakdown of trade with regional partners, we find this pearl:

  • The goods deficit with China decreased from $27.8 billion in January to $20.9 billion in February. Exports decreased $0.5 billion to $9.9 billion, and imports decreased $7.5 billion to $30.7 billion

So net deficit with China tumbled... at precisely the same time China reported its net surplus with the US soared! With so much data manipulation is it any wonder thee lies are just so glaring now?

Most notably however, is that as a result of this "unexpected" surge in the deficit, the Q1 GDP forecast cuts, anywhere between 0.2% and 0.4% are set to begin. To wit: