Economists are on a roll today. Not a single economist got 4th quarter GDP correct and not a single economist got the trade deficit correct. In both cases, economists were overly optimistic.
The Bloomberg Econoday consensus estimate for international trade was -66.0billion in a range of -68 billion to -64.8 billion. The report shows -69.2 billion.
The nation’s goods gap widened sharply in January, to $69.2 billion which is well beyond December’s revised $64.4 billion and outside Econoday’s low estimate. Imports of consumer goods and also vehicles are once again the source of the trade mismatch, surging 4.8 percent and 2.9 percent respectively and helping to lift total imports by 2.3 percent. Exports fell 0.3 percent with weakness in capital goods, down a very sharp 4.6 percent, the unwanted standout feature, one that may deepen in the months ahead based on yesterday’s durable goods report where related orders proved weak. This report will be bringing down early first-quarter GDP estimates.
Advance Reports
Trade in Goods by Category
The above charts from Census Bureau Advance Report.
Consumer goods account for 26.6% of imports. In January, consumer goods imports rose 4.8%. Thus, consumer goods accounted for over half of the 2.3% increase in imports.
Exports look anemic, especially capital goods exports.
Also see GDP Unexpectedly Undershoots Consensus: What’s Ahead?
Mike “Mish” Shedlock
This clearly does not bode well for 1st quarter GDP.
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Probably not so good for international relations too.
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Don’t worry.
Trump is going to announce a big increase in “defense” spending, while cutting massively at the State Department.
Do you think there may be a message there for any country that doesn’t want to “play ball” with Uncle Sam?
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I agree but the effect is likely not as big effect as you might think.
It takes big numbers just to move things s a couple ticks. Even then, it depends on the model. It may have already been anticipated even if economists did not see it.
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This is freaking AWESOME as this means that we are consuming even more cheap goods that will NEVER be paid for….right Mish?
I don’t see how ANYTHING could go wrong!
Once we have achieved consuming 100% imports and paying with bad checks, we will have finally reached Utopia!
People insisting on a more balanced trade, where we pay for imported goods with exported goods in exchange, are simply intent on ruining the good thing we have going for us.
And if our debt needs to reach $100 trillion in order for me to finally become a millionaire, the sooner the better.
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We do pay for these imported goods with an exported good, and an extremely profitable one at that. What can be more profitable than printing George Washington’s face on a 75% Cotton/25% linen blend, and then exporting it? These pictures are very popular in many parts of the world.
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Yes, they ARE attractive, but fortunately as they are MONEY, they represent a claim on our nation’s assets, it’s good faith and CREDIT that can be claimed at any time the holder wishes, and as we print more and more “shares” of this ownership, those held by Americans will lose their value as equally quick as our wishfully duped foreign producers. We will become richer and richer until that moment we realize we own nothing at all, as the bulk of those claims will NOT be held by Americans.
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That’s why the biggest rival to US was not China nor Russia: it was Eurozone. It goes in circles, and at some point in 2009 the US looked bad, and Europe great. Now the wheels have turned, but only for a while.
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Maximus, I tend to see Europe and the US performing a somewhat awkward dance, stepping on each others toes sometimes, taking advantage of each other at others, and somewhere there is method in the madness also, maybe in ways that are not wholesome either.
I have yet to find a clear article on the state of wealth relative between US, EU and China, the views tend to be incomplete, fabricated or biased. So for example
http://www.theportugalnews.com/news/chinese-wages-closing-gap-with-portugal/41195
stands out to me recently, but it is hard to get a true idea of exactly how the various economies really balance out… other articles will point out how wage gaps are very large in certain sectors, or how the current rise in Chinese wages is not sustainable etc. etc.
Would appreciate a relatively concise link that gives something of a fair overview, if anyone knows one.
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4th quaryef GDP 1.9%, strong dollar. Same same.
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For years, the economists have missed GDP as they always expected better than actual. My guess is that this will begin to move the opposite direction and they will soon be missing to the low side.
Business optimism is higher than it has been for years. When businesses are bullish, they invest and hire. That is an economic boost and I think we will see that showing up soon.
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When business is bullish, do they spend more or simply borrow and spend more? Also, since when does consensus actually represent fact?
Many say this Trump rally is driven by optimism in tax reduction…. Something that has not happened yet. What if it doesn’t happen? What of our “positive business climate” then. Is the consensus real?
Does reality matter…..in the long run?
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Too much debt and too high inventories / sales reeks “end of business cycle”.
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Happy days are back again. If anyone remembers, the US was recording a continuous stream of trade deficits about this magnitude before the financial crash, when it was halved.
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“Trade Deficit Unexpectedly Widens: Exports Sink, Imports Up Sharply”
…
King Dollar: heh heh … no matter how many “experts” say I’m going down … I ain’t going nowhere for quite awhile.
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That is not to say other currencies don’t work, and at times better for certain ends, but Dollar has an immense organisational network behind it, it just cannot be matched for now as a language of trade, and hence related investment, by any other currency.
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We are doomed
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