New Record Trade Deficits for the Month and Quarter

International balance of trade data from Census Department, chart by Mish

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $109.8 billion in March, up $20.0 billion from $89.8 billion in February.  

US Quarterly Balance of Trade 2022 Q1

International balance of trade data from Census Department, chart by Mish

Exports, Imports, and Balance

  • March exports were $241.7 billion, $12.9 billion more than February exports. 
  • March imports were $351.5 billion, $32.9 billion more than February imports. 
  • The March increase in the goods and services deficit reflected an increase in the goods deficit of $20.4 billion to $128.1 billion and an increase in the services surplus of $0.4 billion to $18.3 billion. 

Year-to-Date

  • Year-to-date, the goods and services deficit increased $84.8 billion, or 41.5 percent, from the same period in 2021.
  • Exports increased $104.5 billion or 17.7 percent.
  • Imports increased $189.3 billion or 23.8 percent.

3-Month Rolling Averages 

  • The average goods and services deficit increased $9.3 billion to $96.3 billion for the three months ending in March.
  • Average exports increased $4.5 billion to $231.7 billion in March.
  • Average imports increased $13.7 billion to $328.0 billion in March.
  • Year-over-year, the average goods and services deficit increased $28.3 billion from the three months ending in March 2021. 

This post originated at MishTalk.Com

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RonJ
RonJ
1 year ago
Exports, Imports, and Balance”
“worst quarter ever”
Someone has their thumb heavily on one side of the scale
Robbyrob
Robbyrob
1 year ago
What Really Drives Long-Term Interest Rates?
Captain Ahab
Captain Ahab
1 year ago
Reply to  Robbyrob
It was the Fed. Besides duration, I suspect it is changing to expectations for real rate (growth), inflation rate, and risk…
AWC
AWC
1 year ago
But, deficits and debt don’t matter, dontcha know?
And the dollar index is at $1880 to the ounce, and trending,,,,??
Maximus_Minimus
Maximus_Minimus
1 year ago
The deficits are baked into the system, and cannot be resolved until the dollar stops being the reserve currency.
More important question is, when will the services balance turn negative. This presumably benefit from financial services with reserve currency as a centrepiece. With weaponization of the dollar, this may be vastly accelerated.
KidHorn
KidHorn
1 year ago
Being a reserve currency doesn’t mean you have to run a deficit. The main reason USD is a reserve currency is because many countries peg to it to keep their currency from appreciating. Having USD in reserve is a consequence of the pegging.
TexasTim65
TexasTim65
1 year ago
Reply to  KidHorn
That is not correct. Being a reserve currency means you are going to run a deficit (you have to absorb every other surplus country)
Michael Pettis explains why here (it’s a function of math)

Americans alone do not determine their rates of savings
and consumption. Think of an open, global economy as having one huge,
aggregated amount of income that must all be consumed, saved or
invested. That means individual countries must adjust to one another. If
trade-surplus countries suppress their own consumption and use their
excess savings to accumulate dollars, trade-deficit countries must
absorb those excess savings to finance their excess consumption or
investment.

Note that as long as the dollar is the reserve currency, America’s
trade deficit can worsen even when we’re not directly in on the trade.
Suppose South Korea runs a surplus with Brazil. By storing its surplus
export revenues in Treasury bonds, South Korea nudges up the relative
value of the dollar against our competitors’ currencies, and our trade
deficit increases, even though the original transaction had nothing to
do with the United States.

Maximus_Minimus
Maximus_Minimus
1 year ago
Reply to  KidHorn
I didn’t say that. The Euro is the minor reserve currency and has persistent trade surpluses, but the adventurism, recklessness and easy solutions that the reserve currency allows, will only be cured when it’s gone.
TexasTim65
TexasTim65
1 year ago
Reply to  KidHorn
Not true. Being a reserve currently forces the US to run a deficit. Michael Pettis outlined all here (it’s a function of math in that if surplus countries run a surplus someone else must run a deficit and ultimately that ends up on the reserve currency country).
In another article he shows how other countries force the US trade deficit higher.
Americans alone do not determine their rates of savings and
consumption. Think of an open, global economy as having one huge,
aggregated amount of income that must all be consumed, saved or
invested. That means individual countries must adjust to one another. If
trade-surplus countries suppress their own consumption and use their
excess savings to accumulate dollars, trade-deficit countries must
absorb those excess savings to finance their excess consumption or
investment.

Note that as long as the dollar is the reserve currency, America’s trade
deficit can worsen even when we’re not directly in on the trade.
Suppose South Korea runs a surplus with Brazil. By storing its surplus
export revenues in Treasury bonds,
South Korea nudges up the relative value of the dollar against our
competitors’ currencies, and our trade deficit increases, even though
the original transaction had nothing to do with the United States.

John k
John k
1 year ago
Reply to  TexasTim65
The question is, does China really want more dollar credits on the ny fed spreadsheet?
The alternative is to pay their workers more, sufficient for them to afford consuming all they produce, say an extra $1k/yr. This raises prices, they export less and consume more.
The us probably sees a falling dollar and higher prices, reduced imports and less consumption. We want balanced trade, right? Euro with big fossil imports worse.
And saudi maybe also noticed $ credits can disappear, now accepting yuan?
KidHorn
KidHorn
1 year ago
Reply to  TexasTim65
You can run a trade surplus and be a reserve currency. Pretty sure England did that when the pound was the worlds reserve currency. And the US had trade surpluses for decades when it was the worlds reserve currency. One is not a requirement of the other.
The primary reason the USD is the worlds reserve currency is because countries accumulate USD in their monetary sterilization operations. And it also happens to lower the price of imports which adds to the trade deficit. So the two are caused by the same reason, which isn’t the same as one causing the other.
Maximus_Minimus
Maximus_Minimus
1 year ago
Reply to  KidHorn
Britain was running trade surpluses when it was the leading industrial nation during the 19th century. Also embraced free trade. This was damaging to both agriculture and industry. The necessarily small scale agriculture couldn’t compete with cheap imports from America, and led to the decline of country estates.
The methodical implementation of R&D by Germany was the beginning of the end of British manufacturing prowess.
The British pound was still the reserve currency and royal navy still ruled the sees for a while. Inertia.
TexasTim65
TexasTim65
1 year ago
Reply to  KidHorn
The pound was never the worlds reserve currency. Prior to the US dollar it was gold. The pound may have been the worlds most popular currency but it wasn’t a reserve currency. Countries always settled in gold.
The US trade surpluses were when the dollar was backed by gold (so the dollar was not a reserve currency, gold was and countries always settled in gold hence why Nixon closed the gold window). Once Bretton Woods ended and everyone came off the gold standard the US dollar became the reserve currency and deficits started.
Lisa_Hooker
Lisa_Hooker
1 year ago
Why work when money to buy stuff is free?
Billy
Billy
1 year ago
Do you realize the US Dollar Index is almost $104? The Most In Almost 2 Decades!
This doesn’t come to a surprise to me at all.
Maybe if we were stronger against Russia or actually provided Europe the nat gas that they needed to put pressure on the communists, the rest of the world wouldn’t be entering a recession.
Esclaro
Esclaro
1 year ago
Reply to  Billy
Exactly right. The strength of the US dollar is going to destroy what is left of American exports AND destroy Third World debtors with dollar denominated debts. Nice two for one package! This turkey is going down like the Titanic!
KidHorn
KidHorn
1 year ago
Reply to  Billy
It’s because we’re tightening while Japan is loosening.
Maximus_Minimus
Maximus_Minimus
1 year ago
Reply to  Billy
Putin would appreciate your help for putting pressure on communists. His party was trounced by communists in general elections in some regions.
davidyjack
davidyjack
1 year ago
Unsustainable. Trade deficit in March was about 300 per person in USA.
RonJ
RonJ
1 year ago
“2022 starts off the year with the worst quarter ever.”
Maybe a dumb question, but with the downward arc on the chart, what is the chance of a V shaped bounce?
Sunriver
Sunriver
1 year ago
Reply to  RonJ
Zero times a ‘bounce’.
Best the U.S. can hope for is a ‘slower’ negative trade balance.
I wouldn’t count on it however, the world is B.R.O.K.E. and will not be purchasing highly priced U.S. finished goods ‘en masse’.
Expect, continued higher negative trade balances.
Steve_R
Steve_R
1 year ago
Reply to  RonJ
Complete reversal after a Fed meeting says it all, V shaped bounce, upside down V
GleninAK
GleninAK
1 year ago
Mish, you said that Trump did nothing to benefit exports. Now that you have seen the alternative in Biden and Co., do you still hold that view? What data could make you change your mind that his America First mantra and varied attempts to keep jobs and manufacturing here could be considered a success against the tide that has been building to wash away our manufacturing strength?
Mish
Mish
1 year ago
Reply to  GleninAK
Biden is carrying out Trump policy, even increasing it in some instances (insane lumber tariffs and pro-union are two examples)
America First here = Me First everywhere else
There is no success. Only higher costs
Looking ahead, supply chain disruptions, Me First, and hoarding are sure to add to inflation in isolation.
All the consequences of Nixon Shock. Yet, no one wants sound money.
KidHorn
KidHorn
1 year ago
It will get worse before it gets better. Thanks to a strong USD.

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