The trade deficit shrunk by 4.6% matching the lowest Econoday estimate.
What affect do you think today’s report will have on GDP estimates for the first quarter?
Ponder that question while we investigate the report and details from the Census Bureau report on International Trade.
Econoday commented: “For GDP, these data are very positive and help offset not only January’s large trade deficit but also what’s evolving as a weak quarter for domestic consumer spending. For cross-border trade, this report is not upbeat, showing less demand for goods and services both here and abroad.”
US International Trade in Goods and Services
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.6 billion in February, down $4.6 billion from $48.2 billion in January, revised. February exports were $192.9 billion, $0.4 billion more than January exports. February imports were $236.4 billion, $4.3 billion less than January imports.
The February decrease in the goods and services deficit reflected a decrease in the goods deficit of $4.6 billion to $65.0 billion and an increase in the services surplus of less than $0.1 billion to $21.4 billion.
Year-to-date, the goods and services deficit increased $2.8 billion, or 3.1 percent, from the same period in 2016. Exports increased $25.8 billion or 7.2 percent. Imports increased $28.6 billion or 6.4 percent.
Import Key Points
- Imports of goods on a Census basis decreased $4.1 billion.
- Consumer goods decreased $3.1 billion.
- Cell phones and other household goods decreased $1.9 billion.
- Automotive vehicles, parts, and engines decreased $2.6 billion.
- Passenger cars decreased $2.1 billion.
- Industrial supplies and materials increased $1.4 billion.
- Crude oil increased $1.3 billion.
Motor Vehicles and Parts, Phones
Over half of the decrease in imports was due to a decline in motor vehicles and parts. Cell phones accounted for the rest.
Combined, those two import categories shrank by $4.5 billion.
Effect on GDP Estimates?
With exports slightly up and imports down, it’s easy to conclude, as Econoday did, this report will have a positive impact on GDP estimates.
I propose it will not do anything. Why?
Because the Advance Report on International Trade on March 28 estimated the trade deficit would shrink by $4.1 billion. The change since that report is a negligible $0.5 billion.
It possible the models predicted services exports would rise more than they did. If so, we could realistically see GDP estimates drop a tick after this report.
Following the Advance Report, I commented: More Signs of a Weakening Economy: Imports and Exports Decline, Treasury Yields Fall.
Auto sales offered more confirmation of a slowing economy: Auto Sales Final Numbers: Down 5.7%, Two-Year Low; Don’t Worry, It’s Just a Plateau!
The ISM numbers were good but hard data does not match. For discussion, please see Markit PMI vs. ISM Fantasyland GDP Projection: Stagflation Lite?
Mike “Mish” Shedlock
Demographics, spending habits of Millennials and consumer debt to name a few all point to slower growth here and abroad. The growth model of economics is dying as we move to a stagnating economy which in my opinion is not terrible. Not contracting is good, not growing is ok too. Why do we have to continually grow?
just print mo cash said:
without “real” growth dept just keeps rippin higher,that’s why big gov is forced to borrow 12t over the last 8 years in a “recovery” lol,double that if counting off book borrowing,forcing perpetual non stop printing mode
Seenitallbefore, it’s the one and only thing you haven’t seen before : an economy based on simple sustainability not ridiculous growth models that petered out decades ago.
Jon Sellers said:
Without growth, the economy becomes a zero sum game. Having an elite class of super-wealthy becomes untenable. That’s the only reason growth has ever been necessary.
Medex Man said:
You meant to write: “without statistical growth, the unsustainable size of big government can’t keep getting bigger and bigger, and the childish socialists of San Fransisco will throw massive temper tantrums”
Most of the country will be just fine with less money concentrating in the hands of Washington DC criminals.
The era of big government and central planning is over, and good riddance
My 30 something kids have more free household stuff than they could ever possibly use from the Grandparents. I’m also trying to gift them things.
wondering if this is a widespread phenomenon – Milennial household formation not needing as much retail buying as prior generations ?
Medex Man said:
The last thing this country needs is more debt induced “growth” funding an ever bigger cabal of criminals in Washington DC.
Its time to share the wealth. Have the middle class pay down debts and (GASP!!!) actually accumulate some savings so they can fund their own retirements as big government programs are revealed as the ponzi schemes they have always been.
Remember: if Congress actually believed in the Social Security scam, they would be on it. Instead, they exempted themselves. Same story with the obamacare scam — witch pelosi was forced to exempt congress as soon as congress read it.
Save for your own retirement. No one will watch your savings for you, especially not politicians.
If GDP stagnates as debt gets paid down and people save instead of consuming cr-p we don’t need … that is a sign of economic health. Its only bad for central planners.
If you rely on social security, government health care like the VA system and government handouts to fund your retirement, you deserve all the misery that inevitably follows. Congress isn’t relying on their ponzi schemes, and taxpayers shouldn’t either