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Q3 GDP To Slide After 16% Surge In August Trade Deficit; Imports Jump As Exports Drop

Tyler Durden's picture




 

As was previewed last week in the advance release of international trade data which showed a big drop in the US deficit, moments ago the BEA confirms as much, when it reported that in August the US trade deficit blew out from $41.8 billion to a whopping $48.3 billion, an increase of 15.6%, as a result of a $3.7 billion drop in exports, offset by a $2.8 billion increase in imports. The August deficit, driven in major part by the surge in the US deficit with China which shot out to a whopping $32.9 billion, was the worst monthly print since March, and the second worst trade data read going back to early 2012.

More details from the report:

The goods deficit increased $6.6 billion from July to $67.9 billion in August. The services surplus increased $0.1 billion from July to $19.6 billion in August.

Exports

  • Exports of goods and services decreased $3.7 billion, or 2.0 percent, in August to $185.1 billion. Exports of goods decreased $4.1 billion and exports of services increased $0.4 billion.
  • The decrease in exports of goods mainly reflected a decrease in industrial supplies and materials ($2.2 billion).
  • The increase in exports of services mainly reflected increases in financial services ($0.1 billion) and in travel (for all purposes including education) ($0.1 billion).

Imports

  • Imports of goods and services increased $2.8 billion, or 1.2 percent, in August to $233.4 billion. Imports of goods increased $2.5 billion and imports of services increased $0.3 billion.
  • The increase in imports of goods mainly reflected an increase in consumer goods ($4.0 billion).
  • The increase in imports of services mainly reflected increases in travel (for all purposes including education) ($0.2 billion) and in transport ($0.1 billion), which includes freight and port services and passenger fares.

Goods by geographic area (seasonally adjusted, Census basis)

  • The deficit with China increased from $28.8 billion in July to $32.9 billion in August. Exports decreased $0.6 billion to $9.8 billion and imports increased $3.6 billion to $42.8 billion.
  • The deficit with the European Union increased from $12.4 billion in July to $14.5 billion in August. Exports decreased $0.7 billion to $21.7 billion and imports increased $1.4 billion to $36.2 billion.
  • The deficit with Saudi Arabia decreased from $0.5 billion in July to less than $0.1 billion in August. Exports increased less than $0.1 billion to $1.8 billion and imports decreased $0.4 billion to $1.8 billion.

But most notable is that while US shale production is still providing a trade tailwind, the trade deficit excluding petroleum is almost back to all time record highs!

What happens if and when Saudi Arabia succeeds in eradicating US shale production and suddenly the US finds itself sporting the biggest consolidated trade deficit ever? Actually, with the Fed gearing up for QE4, that may just be what the PhDoctor ordered.

 

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Tue, 10/06/2015 - 08:50 | 6634860 Tinky
Tinky's picture

If we get much more of this bad news 18,000 should be but a brief stop on the DOW up elevator.

Tue, 10/06/2015 - 08:51 | 6634867 LowerSlowerDela...
LowerSlowerDelaware_LSD's picture

Yep. Totally bullish.  If we just had MASSIVE job cuts we'd be at 20,000 next month.

Tue, 10/06/2015 - 09:30 | 6635007 junction
junction's picture

One bright spot in U.S.trade had been data storage, with the emphasis on cloud storage.  That positive trade balance will now be a thing of the past, now that the U.S'.s 2000 Safe Harbour Decision has been vaporized by a European court.   Thanks to the NSA worldwide hacking revealed by Snowden, the U.S. will lose billions of dollars worth of data storage and transmittal business.  Where will the taxes come to pay the salaries of those NSA snoopers?  IBM will move its cloud data storage facilities to Europe, where it, like other multinationals, will pay no U.S. corporate tax.  Facebook and Google will have to either stop working as collaborators of illegal NSA spying or comply with European privacy laws.  While corrupt U.S. federal judges take years to make decisions approving U.S. government illegal spying, European courts work fast.  Their judges apparently do no spend all their time watching porn on their computers.  

---

The The European Court of Justice has today declared invalid the Safe Harbor data-transfer agreement that has governed data flows from European users of U.S. cloud services to the U.S. for processing.

“The Court of Justice declares that the Commission’s U.S. Safe Harbour Decision is invalid,” the ECJ said in a statement today, reported by Reuters.

Some 4,000+ U.S. companies rely on Safe Harbor to operate their cloud businesses in the region. It affects those companies that outsource data processing of E.U. data to the U.S.

The Safe Harbor executive decision dates back to 2000, and allows U.S. companies to self certify to provide “adequate protection” for the data of European users to comply with the European data protection directive, and with fundamental European rights such as the right to privacy (under Article 8 of the European Convention for the Protection of Human Rights).

The Safe Harbor rules were already under review by the European Commission, in the wake of the Snowden revelations expose of how U.S. intelligence agencies’ surveillance apparatus was tapping into commercial Internet services, with data protection commissioner Viviane Reding stating back in July 2013 that Safe Harbor “may not be so safe”.

Today’s ECJ’s judgement is the culmination of a 2013 legal challenge by European privacy campaigner Max Schrems who filed complaints against several U.S. Internet giants in the Irish courts for alleged collaboration with the NSA’s Prism program. The Irish courts dismissed the complaint, on the grounds that the European Safe Harbor agreement governed such data flows — referring the case to the ECJ. The latter has now ruled that European data protection authorities cannot rely on the umbrella of Safe Harbor to govern their decisions.

In an initial response to the ruling, Schrems said it “draws a clear line” by clarifying that mass surveillance “violates our fundamental rights”.

http://techcrunch.com/2015/10/06/europes-top-court-strikes-down-safe-har...

 

Tue, 10/06/2015 - 10:35 | 6635329 Consuelo
Consuelo's picture

Great catch there junction...

 

One more nailgun staple in the masonite coffin of the U.S.    Spy agency dirt on sex toys aside, it is only a matter of time before Germany (proxy for the EU as a whole), decides to divest itself from foreign policy diktat of the State Department, and that is when the cascade gets rolling ---

Tue, 10/06/2015 - 08:53 | 6634872 Gilnut
Gilnut's picture

Yup, Bad News is Good News......until it isn't.  What happens when everything (stocks/bonds/FX et.al.) catch down to reality?  Beans and Bullets my ZH friends, everything else is fiat.

Tue, 10/06/2015 - 08:56 | 6634879 RadioFlyer
RadioFlyer's picture

With all the beans, the collapse is gonna stink!  Just sayin...

Tue, 10/06/2015 - 09:01 | 6634892 asteroids
asteroids's picture

Remember folks the FED printed up trillions and gave it to the "boyz". They can move the market up or down at will to whatever level they want. Sure, they'll lose money, but they don't give a shit. Just the cost of business. They want the market up so they can sucker in retail to buy stawks.

Tue, 10/06/2015 - 09:48 | 6635121 yogibear
yogibear's picture

Jobs, manufacturing, saving and productivity are no longer needed in the Fed's model. 

Just printing, stocks and consumption. Worked so far. Just continue but make it much larger.

Tue, 10/06/2015 - 11:06 | 6635448 Oldwood
Oldwood's picture

Its just a damned shame that so many Americans are being FORCED to buy imported goods rather than those manufactured by their friends, neighbors and countrymen. Damned shame...

Tue, 10/06/2015 - 08:53 | 6634865 JustObserving
JustObserving's picture

Luckily unemployment is only 5.1% in the land of the free.  So no need for more jobs.

There is no real growth.  Inflation is adjusted lower to create a fake growth

The Chapwood Index for 2014 was 9.7% and official CPI in the land of the free was only 0.8%.  So the Nominal GDP of 5.6% for 2014 becomes real GDP of -4.1%.

The revised real GDP for years 2011 to 2013 worked out to -6.2%, -6.5%, -6.5% respectively.

What is the Chapwood Index?

"The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation."

http://www.zerohedge.com/news/2015-05-29/inaccurate-statistics-and-threa...

Tue, 10/06/2015 - 08:53 | 6634870 venturen
venturen's picture

you mean a strong dollar is bad? Someone notify Krugman, Obama, Jew(oops I meant Lew) and Yellen!!!

Tue, 10/06/2015 - 08:55 | 6634877 MFL8240
MFL8240's picture

When does this clown get thrown out of the White House?  If any other President did what he has done to the American economy, our standing in the world and race relationships within the US they would have been long gone.  Is it racist to remove incompetence and gross distortions of the truth?  I think not! 

Tue, 10/06/2015 - 08:56 | 6634882 SheepDog-One
SheepDog-One's picture

Just keep those stawks rising, Fed.....rich dude needs a new Ferrari!

Tue, 10/06/2015 - 08:56 | 6634884 Redart
Redart's picture

Yes, that would be a good idea to short ZNZ15 10yr T-note

Tue, 10/06/2015 - 09:01 | 6634894 buzzsaw99
buzzsaw99's picture

this is good news for bullshit stocks

Tue, 10/06/2015 - 09:11 | 6634930 negative rates
negative rates's picture

Bullshit stocks can't afford to be in the red, you be accused of being an assad supporter. So green it is.

Tue, 10/06/2015 - 09:27 | 6634993 buzzsaw99
buzzsaw99's picture

assad bad, obomba good? i can't remember.

Tue, 10/06/2015 - 09:31 | 6635021 Redart
Redart's picture

Bullshit or not, there is where the maney is. The returns on all other assets are zero. Stocks are a good heaven to get returns.

Tue, 10/06/2015 - 11:09 | 6635455 Oldwood
Oldwood's picture

The important thing is to "invest" in easy money schemes that require no labor on our part and instead seek to prosper from others labors or simply bad choices. It's the new American "winning"! We hate on those who would do so in large format schemes such as bankers, but it's quite another thing if we do it. No moral conundrums here at all.

Tue, 10/06/2015 - 09:04 | 6634902 venturen
venturen's picture

saw where 3 month treasuries sold for ZERO INTEREST...for the first time ever. EVERYTHING IS AWESOME!!!

Tue, 10/06/2015 - 09:05 | 6634903 Peter Pan
Peter Pan's picture

Why does any of this matter? Nothing else seems to matter for more than a day or two before the markets clear their collective throat and go back to doing what they always do.....defy logic, fundamentals and the free market.

Tue, 10/06/2015 - 09:14 | 6634934 NoWayJose
NoWayJose's picture

Chinese Xmas crap is already out in some stores. Of course we ordered billions of it !

Tue, 10/06/2015 - 09:19 | 6634955 Mr. Magoo
Mr. Magoo's picture

If everyone got together and boycotted all this cheap Chinese holiday garbage (Halloween, Thanksgiving and Christmas) the collapse would come allot sooner I am all in. Anyone else??

Tue, 10/06/2015 - 09:24 | 6634978 Silverhog
Silverhog's picture

Blow up lawn Santa's and snowman's should be against the law. 

Tue, 10/06/2015 - 11:42 | 6635614 Oldwood
Oldwood's picture

Or maybe it might save that part which is left and worth saving.

Buy goods made by your neighbors and countrymen rather than opting for the good deal on shit you don't really need anyway.

We gave our manufacturing dominance to Japan, not by buying premium quality necessities, but by buying cheap crap...toys and transistor radios. Japan put those profits back into their industries and slowly at first...and then quickly overtook our industries. We have done the same thing with China, beginning with cheap throwaway crap that has eventually displaced what was left of our manufacturing base. It has all been our choice and the sad part is that they didn't just suddenly invade us with low priced high quality goods. We enabled it, we funded it and we facilitated every step of the way by continuing to buy their goods, all while watching our jobs disappear, content on blaming it on evil corporations and government. It is convenient and heart warming to blame those who profit from our foolishness, but accomplishes nothing.

 

Tue, 10/06/2015 - 09:44 | 6635103 yogibear
yogibear's picture

As long as the rest of the orld accepts the US dollar the Fed's Ponzi scheme is good.

Tue, 10/06/2015 - 10:25 | 6635296 silverer
silverer's picture

tick, tick, tick...

Tue, 10/06/2015 - 09:46 | 6635112 AbbeBrel
AbbeBrel's picture

Just wait for when the Yuan devaluation race to the bottom picks up speed. Then the cheap Chinese crap will get even cheaper!! Wait until Chinese car manufacturing ramps up (they need someplace to dump their excess steel production!). If I were a Korean or Japanese auto manufacturer - I would be worried...

Tue, 10/06/2015 - 09:56 | 6635169 yogibear
yogibear's picture

Haven't seen any Chinese brand autos yet. 

Maybe Obama can push through Chinese autos and aircraft. 

Surely the Chinese/Russians can undercut Boeing and Airbus. Plus Boeing has provided all the technology to the Chinese. Carriers are always looking to cut costs. If they can buy a me

 

The European deliveries of Russian Sukhoi Superjet 100 aircraft are likely to start with Ireland.

 

http://sputniknews.com/business/20151004/1028008992/ssj-100-ireland.html

Tue, 10/06/2015 - 10:24 | 6635292 silverer
silverer's picture

Can we export waiters and waitresses?

Tue, 10/06/2015 - 10:13 | 6635223 One World Mafia
One World Mafia's picture

As our manufacturing base dissolves and we are forced to rely more on cheap, shoddy imports, the msm blames our ugly balance of trade numbers on a strong dollar despite it being kept aloft by buy-the-rumor-sell-the-fact Fed never-ending, never materializing promises it will raise interest rates. 

Tue, 10/06/2015 - 10:24 | 6635287 silverer
silverer's picture

So much for the 10's of millions of wasted taxpayer's dollars spent to fund the US Commercial Service and Obama's executive order to increase US exports.

Tue, 10/06/2015 - 10:26 | 6635299 redd_green
redd_green's picture

Gee wiz, now there's a surprise.   Hedge funds and crooked CEO's continue shredding US manufacturing and sending jobs overseas, and ... the trade defcit rises.   Wow, what genius figured this out?

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