Initial Claims Slide Again; Trade Deficit Lowest Since 2009 Despite Soaring Dollar On Imports Plunge

The volatility in initial claims continues: after last week's drop to 282K pulled the heavily-watched number back under 300K, this week we have seen even less layoffs, with the DOL reporting that only 268K claims for unemployment benefits were filed in the past week, well below the 286K expected. The 4-week moving average was 285,500, a decrease of 14,750 from the previous week's revised average. The previous week's average was revised up by 3,250 from 297,000 to 300,250.

It is not surprising that the state with the biggest jump in initial claims was in Texas which accordinng to the DOL was the only state that had a 2K+ increase in claims: to be expected for the state most exposed to the Oil recession.

And while it is no secret that US labor data leave much to be desired it was today's trade data that will shock many, after the BEA reported that in February, the US trade deficit collapsed to just $35.4 billion, a 17% plunge compared to the $42.7 billion January revision, and far below the $41.2 billion expected. The $7.3 billion drop in the deficit was the largest since the $8.3 billion drop posted in June of 2013. And even more notable: the total February deficit was the lowest since October 2009!

How did this happen? The answer: coordinated contraction but while exports dropped by $3 billion in February to $186.2 billion, it was the collapse in imports, which plunnged by $10.2 billion, or 4.4%, to $221.7 billion, that was a flashing red light, and suggests that either the California port strike truly did a number on the US economy, or that the US economy has slowed down far more sharply than anyone had expected.

The breakdown:

• Trade deficit fell 16.9% in Feb.
• Trade deficit excluding petroleum at $27.37b in Feb.
• Imports fell 4.4% in Feb. to $221.69b from $231.92b in Jan.
• Exports fell 1.6% in Feb. to $186.25b from $189.24b in Jan.

A look at just US oil imports:

• Feb. non-crude petroleum imports narrowed to $3.8b from $4.5b m/m; 28.3% of total petroleum imports
• Crude oil imports averaged 6.859m b/d in Feb. compared to 7.186m b/d in Jan.
• Oil imports from OPEC fell to 34.7% of the total
• Oil imported from Canada and Mexico was 55.9% of total in Feb. vs 53.0% in Jan.
• Petroleum deficit in real dollars at $9.92b in Feb.
• Petroleum exports fell in real dollars to $7,456b in Feb. after $8,536b in Jan.

The full details from the BEA:

The U.S. monthly international trade deficit decreased in February 2015 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $42.7 billion in January (revised) to $35.4 billion in February, as imports decreased more than exports. The previously published January deficit was $41.8 billion. The goods deficit decreased $7.4 billion from January to $55.2 billion in February. The services surplus decreased $0.1 billion from January to $19.7 billion in February.

Exports

Exports of goods and services decreased $3.0 billion, or 1.6 percent, in February to $186.2 billion. Exports of goods decreased $2.9 billion and exports of services decreased $0.1 billion.

• The decrease in exports of goods reflected decreases in capital goods ($1.7 billion), in industrial supplies and materials ($1.4 billion), and in automotive vehicles, parts, and engines ($1.1 billion) that were partly offset by an increase in consumer goods ($1.3 billion) was partly offsetting.
• The decrease in exports of services reflected decreases in transport ($0.2 billion), which includes freight and port services and passenger fares, and in financial services ($0.1 billion) that were partly offset by increases in other business services ($0.1 billion) and in travel (for all purposes including education) ($0.1 billion).

Imports

Imports of goods and services decreased $10.2 billion, or 4.4 percent, in February to $221.7 billion. Imports of goods decreased $10.3 billion while imports of services increased less than $0.1 billion.

• The decrease in imports of goods mostly reflected decreases in industrial supplies and materials ($4.4 billion), in capital goods ($2.6 billion), and in automotive vehicles, parts, and engines ($1.7 billion).
• The increase in imports of services reflected an increase in travel (for all purposes including education) ($0.1 billion) that was mostly offset by a decrease in transport ($0.1 billion).

Goods by geographic area (seasonally adjusted, Census basis)

• The goods deficit with Japan decreased from $6.5 billion in January to $4.3 billion in February. Exports increased $0.1 billion to $5.4 billion and imports decreased $2.1 billion to $9.7 billion.
• The goods deficit with China decreased from $29.3 billion in January to $27.3 billion in February. Exports decreased $1.5 billion to $9.0 billion and imports decreased $3.5 billion to $36.3 billion.
• The balance with OPEC countries shifted from a deficit of $1.2 billion in January to a surplus of $0.3 billion in February. Exports increased $0.3 billion to $6.4 billion and imports decreased $1.3 billion to $6.0 billion

So is a soaring US dollar good for the economy and for the US trade balance? No. But what the data above reveal is that while US exports slowed, imports slowed even more as the global contraction spills over to all American trade partners.

Comments

[Bill of Rights]

http://investmentresearchdynamics.com/the-government-has-already-busted-...

[GetZeeGold]

Number of 29.5 hr/wk job loss claims?

Oh that's right.....there aren't any.

[junction]

The jobless numbers really belong in a "pick a number, any number" category.  All made-up, extrapolated from previous unemployment numbers.  The real bad number that no one reports is the underemployment number, how many college graduates are working for $12 to $16 an hour in jobs such as supermarket clerks.  And what about the jobs report on how many $100,000/year or higher jobs have been lost, the type of jobs that Meg Whitman is getting rid of now at Hewlett-Packard, following the earlier example set by Carly Fiorina?  The numbers the Feds issue on unemployment are all bogus, to avoid telling the peasants there is no such thing as job security in the USA anymore (something NBC happy talk anchor Brian Williams never reported on when he had a job) and almost all the new jobs created leave the worker with less buying than a $2.00 an hour minimum wage job in 1975.     

[Stuck on Zero]

All those energy production workers are now happily employed as bar tenders and waiters. All is rosy.

[boogerbently]

Peeing on our leg, and saying nthat it's raining.

The Unemployment #'s are bogus.(based on faulty data for showing real unemployment)

After 6 years, almost 300,000 people a week are signing up for unemployment, EVERY WEEK ?

Sure it's getting lower, eventually we run out of people to lay off.

Why is this a "happy" number ?

[madbraz]

It's official, we are at peak "Larry Summery/Robert Rubin goal-seek-economic-data-fudge-keep-up-the-confidence-corrupto-sham".

[Dr. Engali]

It never ceases to amaze me how much stuff the rest of the world is willing to give us in exchange for the BernankenYellenstein's funny money. It just goes to show you that the bigger fool theory applies to nations as well.

[Winston of Oceania]

Their fiat is depreciating even faster so they would be fools not to.

[Winston of Oceania]

We just quit buying imported "items of flimsy manufacture" as Poor Richard used to call them. Last purchase was for an end table with an integrated lamp. It was assembled backwards requiring repair which revealed the lamp components that were simply substandard. I not only corrected the assembly errors but replaced the lamp components as well from an older better made American lamp.

[Roanman]

I'm not an expert here, but I'm guessing that the key sentence in the analysis of the trade numbers is, "The deficit decreased from $42.7 billion in January (revised) to $35.4 billion in February, as imports decreased more than exports." 

[boogerbently]

So, once we lay everyone off, and we don't/can't import anything because no other country will accept our worthless fiat, we'll be "cured" !

Recession over, mission accomplished.

[ReactionToClose...]

seems this is exactly what Levy Forecasting forcast last April........emerging markets are going to topple developed markets in conjunction with overly strong US$ and weakening Euro & Yen (good for Germany.....buys time for Japan...not much for anyone else)

[general ripper]

There's no one left to fire or layoff!

[adr]

What I don't get is how you end up with a $17-18 trillion economy out of somewhere around $5 trillion worth of import and exports.

If exports only bring in around $2.5 trillion, that is all the money US corporations bring in abroad. If foreign sales represent 50-60% of business, then you only have another $2-2.5 trillion in domestic sales. The $3 trillion in imports must be deducted from the total. $3 trillion in imports represents around $7 trillion in retail sales so you end up with $4 trillion in domestic business.

You end up with a $9 trillionish productive economy. It is complete BS to add services and government expenditures to GDP because those services must be paid for out of the profits of the $9 trillion productive economy. To make matters worse the $9 trillion productive economy represents gross dollars, not profit. There is no way you get a $17 trillion economy out of the wages paid from the profits of $9 trillion.

SO with any honest look you have to come to the conclusion that the US economy has not grown at all over the past 15 years. The expansion of GDP has been nothing but the expansion of debt paid for by the expansion of the Fed's balance sheet.

Maybe I'm wrong.

[Q-Q-Q]

I still can't get over the supposed 50k retail jobs created in January, oh how that made me laugh. I'm old skool, if you are going to bs then at least make an effort to remain feasible!!

[Chuck Knoblauch]

Shadow government economy coming online.

You don't need to know in a planned economy.

Government will take care of you.

First step is to make the numbers meaningless.

[SmittyinLA]

"The U.S. monthly international trade deficit decreased in February 2015"

Goebbels would be proud of that line.

Love the wordplay, trade deficits are "cumulative", the trade deficit increased by an additional 35.5 Billion* in 1 month and that includes offsets by foreign investments in America (not stuff but real estate)  

[ajkreider]

The import drop is no surprise given the port fiasco.  But this will boost Q1 GDP, since imports count against the number.