Update: JPM just jumped on the bandwagon and cut Q1 GDP to -0.8% from -0.4%. Don't worry: it snowed.
The US "recovery" is starting to feel more and more recessionary by the day. As we warned after we reported the trade deficit, it was only a matter of time before the Q1 GDP cuts came. And come they did, first from Barclays, and now from Goldman, which just doubled its GDP forecast loss for the past quarter from -0.3% to -0.6%.
BOTTOM LINE: The March trade deficit was roughly in line with consensus expectations, narrowing from February. However, imports were substantially higher than the Commerce Department had assumed in its initial estimate for Q1 GDP. We reduced our Q1 past-quarter tracking by three-tenths to -0.6%.
MAIN POINTS:
1. The March trade deficit narrowed to $40.4bn (vs. consensus -$40.0bn), from a revised $41.9bn in February. The real petroleum balance narrowed (+$0.6bn to -$11.3bn), while the real ex-petroleum balance widened (-$0.8bn to -$42.4bn). Exports rose 2.1%, more than reversing their February decline, while imports rose 1.1%. The 10.8% increase in food & beverage imports appears to have been driven by the jump in agricultural import prices already released for the month. By country, the large drop in seasonally-adjusted exports to China which occurred in January and February stabilized in March.
2. Both imports and exports were higher than the Commerce Department assumed in their initial estimate for Q1 GDP growth. However, imports exceeded their assumption by a significantly larger margin, pushing our Q1 past-quarter GDP tracking estimate down by three-tenths to -0.6%.
Also, keep in mind that as we explained before, Q1 GDP was boosted around 1% by the forced spending "benefit" of Obamacare: a GDP contribution that will no longer be there. Which means that either normalized Q1 GDP is approaching -2%, or Q2 GDP is about to be whacked by the same amount. Pick your poison. One thing is certain - anyone hoping that 2014 is the year in which the US economy finally achieved "escape velocity" will have to drink the humiliation under the table as they repeat the mantra of apologists everywhere: "snow.... snow.... snow...."