- United States Initial Jobless Claims was reported at 242K in 31/Mar from 218K in the previous period. It was expected at 225K.
- United States Continuing Jobless Claims was reported at 1,808K in 24/Mar from 1871K in the previous period. It was expected at 1849K.
- United States Challenger Job Cuts was reported at 60.4K in March from 35.4K in the previous period.
- United States EIA Natural Gas Stocks Change was reported at -29B in 30/Mar from -63Bcf in the previous period. It was expected at -26Bcf.
- United States Trade Deficit was reported at -$57.6 billion in February from -$56.6 billion in January.
- Exports reported at $204.45B in February from $200.95B in January
- Imports reported at $262.04B in February from $257.61B in January
U.S. Trade Deficit Widened Even Further in February
The U.S. trade deficit rose to yet another post-Great Recession high in February. It probably will widen even further in coming months.
Exports Rise, But Imports Grow Even More
The U.S. trade deficit widened even further in February, rising to yet another post-Great Recession high of $57.6 billion. The trade gap was higher than most analysts had expected. Although exports of goods and services were up by $3.5 billion during the month, imports jumped, even more, raising $4.4 billion.
The increase in exports in February may reflect, at least in part, some statistical payback for the sizable decline that occurred during the previous month. Drilling down into individual categories shows that there generally was broad-based strength in exports in February, with gains in industrial supplies and materials ($2.0 billion), capital goods ($658 million) and autos ($925 million). Exports of consumer goods fell by $840 million in February, but this seems to be more of a one-month outlier rather than a general trend. Indeed, with economic growth remaining solid in the rest of the world and with the trade-weighted value of the dollar down approx. 9 percent from its high in late 2016, U.S. export growth should remain resilient in coming months.
There was a broad-based strength on the import side of the ledger as well. Higher prices of oil led to a modest increase ($256 million) in imports of petroleum products in February. But most of the increase in total imports reflects gains in non-petroleum products. Solid growth in U.S. domestic demand in recent months continues to pull in imports, and thus expect this dynamic to remain intact in coming months as well.
Net exports exerted a 1.3 percentage point drag on GDP growth in the fourth quarter of 2017, and it appears that the foreign sector continued to exert headwinds on U.S. GDP growth in the first quarter. Not only has the nominal trade deficit widened in recent months, but so too ha the real trade deficit, which matters for real GDP growth. If the volume of exports and the volume of imports remained unchanged in March, then real net exports will exert a drag on real GDP growth that ould be equal to 3/4th of a percentage point.
A potential snag in the expectation of the trade deficit widening would be tariffs that the United States and China have threatened to levy on each other’s products in coming months. A full-blown trade war between the world’s largest economies, should one develop, probably would not cause American exports and imports to go into reverse, but it could weaken growth in trade.
QUOTE OF THE DAY
“Everyone’s had an interesting life. Unless they’re interested in business or something.” – Leonora Carrington, British artist born this day in 1917. Died 25 May 2011