US Trade Deficit Soars To Worst Since Financial Crisis; Will Push Q1 GDP Negative

After shrinking notably in Feb, March's US Trade deficit exploded. Against expectations of a $41.7bn deficit, the US generated a $51.4bn deficit - the worst since Oct 2008 and the biggest miss on record. Exports rose just $1.6bn while imports soared $17.1bn with the goods deficit with China soaring from $27.3bn to $37.8bn in March.

Ironically, just as the "harsh winter" was found to lead to a GDP boost due to a surge in utility spending, so the West Coast port strike which was blamed for the GDP drop, was actually benefiting the US economy as it lead to a plunge in imports. In March, however, the pipeline was cleared, and US imports from China soared by over $10 billion to $38 billion.  End result: prepare for upcoming Q1 GDP downgrades into negative territory, which with a Q2 GDP of 0.8% (per the Atlanta Fed) means the US is this close form a technical recession.

Worst trade deficit since Lehman.

 

The increase in imports of goods mainly reflected increases in consumer goods ($9.0 billion), in capital goods ($4.0 billion), and in automotive vehicles, parts, and engines ($2.7 billion). A decrease occurred in petroleum and products ($1.1 billion).

The goods deficit with China increased from $27.3 billion in February to $37.8 billion in March

From the report:

The U.S. monthly international trade deficit increased in March 2015 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $35.9 billion in February (revised) to $51.4 billion in March, as imports increased more than exports. The previously published February deficit was $35.4 billion. The goods deficit increased $14.9 billion from February to $70.6 billion in March. The services surplus decreased $0.6 billion from February to $19.2 billion in March.

Exports

  • Exports of goods and services increased $1.6 billion, or 0.9 percent, in March to $187.8 billion. Exports of goods increased $1.5 billion and exports of services increased $0.2 billion.
  • The increase in exports of goods mainly reflected increases in capital goods ($1.5 billion) and in automotive vehicles, parts, and engines ($0.8 billion). Decreases occurred in consumer goods ($1.7 billion) and in petroleum and products ($0.6 billion).
  • The increase in exports of services reflected an increase in transport ($0.1 billion), which includes freight and port services and passenger fares, and increases in several categories of services of less than $0.1 billion. A decrease in travel (for all purposes including education) ($0.1 billion) was partly offsetting.

Imports

  • Imports of goods and services increased $17.1 billion, or 7.7 percent, in March to $239.2 billion. Imports of goods increased $16.4 billion and imports of services increased $0.8 billion.
  • The increase in imports of goods mainly reflected increases in consumer goods ($9.0 billion), in capital goods ($4.0 billion), and in automotive vehicles, parts, and engines ($2.7 billion). A decrease occurred in petroleum and products ($1.1 billion).
  • The increase in imports of services mainly reflected increases in transport ($0.6 billion) and in travel (for all purposes including education) ($0.1 billion).

Goods by geographic area (seasonally adjusted, Census basis)

  • The goods deficit with China increased from $27.3 billion in February to $37.8 billion in March. Exports increased $0.4 billion to $9.3 billion and imports increased $10.9 billion to $47.1 billion.
  • The goods deficit with Japan increased from $4.3 billion in February to $6.3 billion in March. Exports increased $0.2 billion to $5.6 billion and imports increased $2.2 billion to $11.9 billion.
  • The goods deficit with Germany decreased from $6.3 billion in February to $5.6 billion in March. Exports increased $0.1 billion to $4.3 billion and imports decreased $0.5 billion to $9.9 billion.

So to summarize: First 'harsh weather' was found to boost Q1 GDP, and now West Coast port strike boosted imports  with the resumption of Chinese imports in March to slam Q1 GDP into negative territory.

 

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