Advance Trade Data Highlights
- The international trade deficit in goods was $86.7 billion in February, up $2.1 billion from $84.6 billion in January.
- Exports of goods for February were $130.1 billion, $5.1 billion less than January exports.
- Imports of goods for February were $216.9 billion, $3.0 billion less than January imports.
The net impact is a record high trade deficit in goods of $86.7 billion as shown by the Advance Trade Data.
Recession Unlike Any Other
The Covid recession is unlike any other.
Normally, trade deficits shrink in recessions. This time, we are hitting new record trade deficits, one after another as shown by the red trade deficit line in my chart.
Why is That?
In two words “Free Money”.
The US has handed out record amounts of free money stimulus in response to Covid.
US consumers have thus been able to maintain spending habits. And they are buying record amounts of foreign junk as shown by the blue imports line on the chart.
In contrast, no other country in the world is handing out similar amounts of free money. So US exports are suffering relative to imports.
Free Money
Due to free money, personal income in the US rose during the pandemic.
Rising personal income during a recession is another example of how this recession is unlike any other.
I offer the obvious political solution to the export problem: The US needs to give more free money to the rest of the world.
For an interesting chart of personal income trends with and without free money, please see Let’s See How the Free Money Distribution Checks are Going
And to pay for the “free money” Expect Higher Taxes, Possibly a VAT.
Mish
“In contrast, no other country in the world is handing out similar amounts of free money.”
This is not even remotely accurate. Italy – $900/mo, Spain – $1150/mo, Canada 75% of wages, NZ – $1500/mo, AU – $1000/mo, Hong Kong $2300/mo, UK up to $3000/mo, Denmark – up to $4500/mo. I could go on for dozens of countries.
WRONG ! European countries don t give away money unless people lose their jobs or had to close down their business because of the pandemic ….
Deficits, surpluses, insane indebtedness, employment or the lack of it, pandemic or no pandemic, further destruction of the planet , NOTHING matters anymore….Central Banksters are now totally in charge of a pointless ratrace creating illusive prosperity in general and decadent affluence among the already too rich in particular….Let s enjoy while we can…Fairytales only end well in children’s books…
LOL
“I offer the obvious political solution to the export problem: The US needs to give more free money to the rest of the world. ” I ask this question, which country would the stuff people buy be manufactured in, primarily? I don’t think it would be US stuff they would be buying. So, who would be the beneficiary of the money we hand out?
And to pay for the “free money” Expect Higher Taxes, Possibly a VAT.
MISH = 100% anti fact, anti reality.
“Why is That?
In two words “Free Money”.
NO. FREE MONEY HAS BEEN HANDED BY FED AND US GOVT TO CORPORATIONS AND THE ULTAR RICH BY THE TRILLIONS (SEE BERNAKE, BUSH, CHENEY, OBAMA, POWELL, YELLEN) FOR DECADES. YOU’LL HAVE TO BE FACT BASED WHICH ARE NOT BEING.
“The US has handed out record amounts of free money stimulus in response to Covid.”
NO. NOT A RECORD AT ALL. WHAT IS A RECORD IS THE FREE MONEY GIVEN TO CORPORATIONS AND THE ULRA RICH UNDER BUSH OBAMA TRUMP.
I agree with@Sechel that trade deficits are not that much of a problem. The problem is everyone wants to fix them. And Tariffs by Trump made matters worse.
Trade deficits are a fact of life in a multi currency world.
Trade deficits don’t matter much but losing strategic industries because of free trade does. Even Adam Smith recognized that industries needed for the defence of the Realm should be excluded from free trade.
The tariffs on steel were spot on.
We buy p.c.’s flat screens and laptops. Those items are not made in the United States for the most part. Sure if we domestically made them they wouldn’t show up in the balance of trade as a negative but the cost of these items would surely rise. Just a reminder that trade deficits are not inherently bad. It’s a piece of information and only part of the puzzle.
I agree trade deficits are not much of a problem. The problem is everyone wants to fix them. And Tariffs by Trump made matters worse.
You didn’t like being tariff taxed because 80% or more of the consumables we use in the US are produced in China? How could that not solve the trade deficit problem? There was mention of the idea that Trump would remove the tariffs to help Americans through the pandemic. That never happened.
Balance of trade has become political. It’s getting in the way of good decision making. For example both Trump and Biden say we need to start realizing we compete with China at the very least but political considerations prevent us from embracing the TPP which should be a key part of that containment policy
Pres. Obama really fumbled the TPP issue. Why he thought that he could get it passed when he went to such lengths to keep the treaty text a secret from Congress I’ll never know.
I also agree that deficits aren’t that much of a problem. They simply reflect a willingness to accept a higher standard of living in the short run.
Of much more concern is the drop in educational quality over the last fifty years, because that portends a future where the US struggles to remain competitive.
How long will other countries keep accepting pieces of paper for real things?
That’s a good question. And how long will workers in the US get tired of trading their labor and time for something that someone has the power to inflate away via the power of of the printing press? And then we wonder how come the world has gone crazy?
Presumably until they own a substantial portion of the real estate and businesses in the US.
As long as there is a US military base on their soil.
Yep that sums it up.
In truth until their own countries decide to run a deficit. There is no other possible way for the math to work. If the US runs a deficit, someone else must have a surplus in which case they accept our pieces of paper.
“Reasonable” trade deficits are not that much of a problem, when you can see the flow being slowed down or reversed in the future. That does not seem to be the case in the last 20 years or so here in the US. It may be a cause the huge government deficit we are experiencing here in the US, also. Good thing the producing countries are taking the money and investing it back into our bonds to help finance this debt.
….till Bitcoin becomes legal tender, I guess…..hahaha… CRAZY world !
forever, those countries need those workers to be employed and kept busy. Those countries do not need a large number of idle men and women thinking about replacing their respective ruling class.
Could you clarify the meaning of foreign junk? Is this junk different from US junk?
Ever been to Walmart?
Probably by a few cents…but I guess once it crosses the border it becomes American… the Chinese probably wouldn’t take it back if you paid them to, except as American trash or something.
The definition for most people is that junk is what someone else buys but they don’t.
What an early riser you are….Good morning !
Early riser? It’s 11.58 AM. Already had a three mile walk.
You are not in the US then ?
fck….mixed you up with Eddie …you are in France of course….Bonne journée !
Goedendag!
Good morning to you too.
I offer the obvious political solution to the export problem: The US needs to give more free money to the rest of the world.
This has been done before, and successfully too. It was called the Marshall Plan, and the craziest part of it was giving money to our ENEMIES. So, why not give it to our friends now?
The Marshall Plan “worked” when our defeated enemies’ industrial capacity was crippled: They had limited options other than to purchase US goods & services. Given Chinese industrial capacity today, the a Marshall Plan-like approach wouldn’t be successful, IMHO.
I agree, but when has the likelihood of failure ever stopped America from doing anything?
Point taken. However, I’m not even sure that the Marshall Plan would even work in today’s world. Our track record of “nation-building” has been rather poor as of late.
I really object to you calling our 2 new LG OLED TVs “foreign junk”.
Not junk.
We love the 77-inch one in our modest “home theatre”
Where will those TV’s be in 20 years?
My Samsung plasma 55″ is working fine after 15 years.
Out Panasonic 50-inch plasma TVs were fine. But the OLED TVs are so much better.
Ten years. Junk.
You exchange with your useless printed paper ( so called USD ) and you think you are loser?
You exchange with useless printed paper so called USD and you still think you are loser?
TV’s are junk, camera’s are investments. It’s all personal choice
Send em some of yours.
Sooner or later it all goes in the landfill
Sooner or later everyone in the conversation goes into the landfill.
I am going to be thrown in a bog and dug up 2000 years later. That’s the cool way to go.
I don’t think it’s that big a deal. It’s a COVID anomaly…..unless the free money keeps coming,
Btw, did you read that Evanston IL is already giving reparations to its deserving persons of color…..I’m sure no federal money will be used for stuff like that….Right?
Right?
And of course those persons of color were very quick to say it’s a good start. Because of course there can never be an end to such reparations because they won’t allow such a thing to be even considered no matter how much they are given.
Residents of Evanston are getting screwed by their gov’t and should vote them out ASAP.
Actually one of the black city council members voted against it (it passed anyway) because the money has to be used for certain purposes (primarily home improvements if my memory serves)……so she said it falls short of the REAL reparations they deserve, which presumably could be spent on anything at all.
it falls short of the REAL reparations they deserve, which presumably could be spent on anything at all.
Shorter version: freedom.
of course there can never be an end to such reparations because they won’t allow such a thing to be even considered no matter how much they are given.
Understandable, since slavery would have gone on and on without a war and 600K dead. Jim Crow immediately took over where slavery ended and continues to this day. Hard to blame counter-racists when racists prove again and again they have no interest in stopping.
Slavery still exists in Africa, Are you aware of that? In Eritrea, you can sell yourself into debt slavery today. Perfectly legal. I never hear anybody say shit about that on the internet,
Maybe that’s one reason Eritrean refugees are all over Europe
In most of the western world, including the UK, slavery ended with no war at all. There is compelling evidence that although there was plenty of support for slavery in the South, the real reason for the Civil War was the onerous tariffs placed on on European imports after the War of 1812…..(like farm equipment) which accrued benefits to the North at the Southern state’s expense.
The war was about taxes more than anything else.
You can read all about it in the book Mish recently reviewed, “Daylight Robbery.” Dominic Frisby lays it all out very well. And he isn’t even from the US, so why would he have some axe to grind?
My great-great grandfather died at South Mountain in the fall of 1862, just six days after Harper’s Ferry and three days before Antietam, the bloodiest one day battle in all of human history. There is a famous poem about South Mountain that is based on a true story of the dead being thrown into an abandoned well because there were too many to bury in proper graves. My ancestor’s exact resting place is not known. He was thirty.
He left four orphaned children, the eldest of whom was my great grandfather, who came to Texas after the war….after Sherman burned his way through South Carolina on his way to meet Grant at Richmond. Today Sherman’s tactics would be considered a war crime. Nobody talks about that on the internet either.
So if ex-slaves are still entitled to reparations, I think people like myself, whose families were left destitute and fatherless and hungry by the war might be due some consideration too.
Our very history was lost. I only know what I just wrote because I spent the time to research what happened. My parents never knew.
The truth as I see it is that it was a terrible war that benefited almost nobody, and that slavery would have ended soon one way or another, because it was ending everywhere else in the world…… in the same general time frame.
You guys all like to talk about Jim Crow and how horrible it was for the ex-slaves.
How about the way the US federal government completely forgot about the ex-slaves immediately after the war, gave them nothing, and left it to the defeated South to somehow both continue to feed almost ALL the ex-slaves and put them to work in some way that kept the economy viable and didn’t end up in genocide. Did you know that the exodus of blacks out of the South was minimal until after WWI?
Did you know that before the Civil War that there were more free blacks in the South than in the North? In Maryland, for instance, 49% of blacks were free in 1860. Look it up if you don’t believe me.
We have some very poorly educated people trying to preach anti-racism these days. Save your liberal outrage to share with the ignorant people who know nothing of what really happened. I know way too much about history and racism to be conned by people looking to get free money by playing the slavery card.
I wasn’t trying to persuade you Eddie. People like you can’t be persuaded. You’re too confident in your perceived “knowledge,” such as the Battle of Antietam being the deadliest single-day battle in human history … it’s not even close. American history yes, world history it doesn’t even crack the top-20.
I simply point out the salient fact that a substantial, politically-energized minority are fighting for their perceived “justice.” They will likely get it. Your opinion of its merits matters not at all to them, or to me for that matter. Your perceived monopoly on truth is nothing of the sort.
Keep fighting them Eddie, the fighting will go on long after we’ve gone.
I doubt they’ll get it (perceived justice). Or rather I doubt they’ll ALL get it for the same reason as I said there can never be enough reparations paid.
For some, it’s already been enough and they have their justice. For others its something the see as attainable in the future. But for some others it can never be enough. This is human nature and of course why your last statement about the fighting going on long after we’ve all gone is quite correct.
The big question about who pays and for what has to do with the idea of ‘sins of the father’ and what about those who were never even here during any of it (immigrants like myself).
My ancestors fought for the North to free the slaves and four died in battles. Do I get Brownie points for that please please?
Haven’t you already though?
No we haven’t. I want a rebate for the blood and effort. If you want to make it a monetary transaction then you owe me for four of my ancestors lives that died to free the slaves.
Talk to your Congressperson.
Already have.
I thought you live in France?
Yes I do live in France although I am American.
At least one of my great-great grandfathers also fought for the North. The main thing I have gathered from studying the US Civil War is that no family went untouched. Everybody suffered, on both sides
My father’s great-grandfather was in the Texas State Troops during the war, and he also died, in the last winer of the war. I don’t know what he was doing. Most people have never heard of the Texas State Troops, nor is their role well documented or well understood…….they essentially took over for the Texas Rangers, almost all of whom went wth Hood. The TST fought the Comanches..but I think joining was a way of avoiding conscription. All Southern men up to age fifty were drafted.
In Texas there were many strong Unionists, especially in north Texas.. More than fifty men were hanged in 1862 by Secessionist vigilantes for being suspected Union sympathizers. That remains a record too….the worst example of vigilantism in American history. All of these unfortunate war victims were Anglo. I don’t hear anyone calling out for justice for their descendants .
I’m not fighting any battles. I am firmly anti-war and anti-military. I just object to the silly political use of race, especially the dredging up of 150 year old grievances by as a tool to redistribute wealth in our current society. It makes zero sense.
And no, I don’t have all the knowledge, and I do make mistakes and gladly admit it.
I misspoke about Antietam…..should have said the bloodiest one day battle in American history….but it certainly was right up there, especially when you consider that some of the battles with bigger losses were fought by much bigger armies. Napoleon and the Russians killed more of each others troops at Borodino (claimed by many articles to be the bloodiest one day battle) …but the armies were much larger, dwarfing the combined Union and Confederate forces at Antietam by more than five times.
Right, if you choose your words more carefully, then people like me won’t have to correct you.
You have nothing to say because you have no moral ground. It’s just a shakedown.
I’m not seeking any reparations.
Those replies are for Doug.
Btw, I object to your ad hominem use of “people like me” as a perforative,, @[Mr. Purple] .
You don’t even know me.
You gladly put me in a box you’ve created and label me as a racist, just because I don’t agree with your silly take on anti-racism. Nothing could be further from the truth.
People like you refers to blowhards who type tl:dr’s over and over without a clue. As I wrote, you’re overconfident in your knowledge and therefore closed-minded.
You are correct that I don’t know you — obviously you and I know what we know about each other from whatever we see each other post. That’s the range and context of my commentary.
Tl:dnr has more to do with the attention span of the “did not read-er” than anything else. Some ideas require considerably more than 280 characters to fully develop.
You seem to be very confident in your knowledge, or at least quick to criticize people who don’t go along with your misguided anti-racism. Do us both a favor and give my comments a pass. My impression of you is that you’re young and ignorant. Att least time will change one of those, if not both.
We watched a Paloma Faith program last night and she was firmly told that if she wants to break into the US then she must reshoot her video showing an interracial couple. The black man to be replaced with a White man, as it wouldn’t go down well with an American audience! She refused and they never aired it!
“We have some very poorly educated people trying to preach anti-racism these days have some very poorly educated people trying to preach anti-racism these days.”
It still seems someone should.
I don’t think you get it.
This new social justice brand of anti-racism is not about racial tolerance……mixed race couples here are no longer ostracized like the Jim Crow days…there are many famous mixed race couples here, and my impression is that there are more black men partnered with white women than the converse. This is accepted in most places in the US, and nobody cares.
Faith Paloma wouldn’t need to change anything to make it here…I just think that’s bs.
I’ve stated clearly why I think anti-racism today is just an offshoot of other social justice movements, and that it’s aims are about power and money and political thought, and have little to do with real racial justice.
It’s like Trump pretending to care about working people, so he can get something out of it. MAGA was a good slogan…..but it wasn’t a real movement. It was a just a slogan.
Had you asked me five years ago if I were anti-racist, I might have said yes. I surely would have said, and still would say that I am in favor of all people being treated equally under the law.
What I am saying is that there is a movement now called anti-racism that really has very little to do with civil rights or tolerance, or equal protection under the law. It is anti-intellectual and anti-white……..and so it is itself in fact inherently racist…..
“Faith Paloma wouldn’t need to change anything to make it here…I just think that’s bs.”
Don’t know why she’d make it up. As I say we saw her say it on a TV documentary about her career but it’s also reported here.
link to dailymail.co.uk
Maybe it’s only the record company executive that’s at fault and misjudged the situation.
Having lived in Evanston for three years, I can tell you that it’s a very strange town. Some examples that come to mind:
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that means the U.S economy will never overheat. trade deficits lower econ growth and keeps prices low because us manufacturing workers compete with slave labor markets i e china Viet Nam and others.
The balance of trade consists of goods and services.
Exports of goods and services minus imports of goods and services = the trade surplus or deficit.
The advance data is goods only.
The US runs a trade surplus in services.
The net is always negative because trade in goods is far bigger than trade surplus in services.
The latest data is goods only, not services
True, though Michael Pettis explains it better in his various blog posts about how the US must run a deficit because those countries are running forced savings (China, Japan etc).
The record numbers are only going to get larger as more stimulus money gets pumped into the system as you well know.
Deficit “in goods”. What is not being said here? Like, is there anything else in trade balances? And, if so, how is that something-else going?
I’m in the dark as to what a trade imbalance really is, other than something measurable and given credence of some sort.
We give them numbers that represent pieces of paper, and they give us megatons of stuff that ends up in landfills. Then they come compete with our children, to buy houses with those paper numbers. They also buy our companies, and basically colonize us in exchange for a quantity of ephemeral plastic crap.
This was noted decades ago, and you’d hear politicians talk about ‘selling out future generations’. You don’t hear that anymore. These are the generations that have been sold out.
And 80% of the crap they were sold out for is already in the landfill.
It’s not really any different than when the natives sold Manhattan Islands for blankets, beads, and trinkets, is it?
To be fair, the new plastic crap is a lot more awesome than those beads. At least until it goes in the landfill. Somebody probably still has the Manhattan beads.
Beads were very valuable to the Indian tribes there because it allowed them to vastly increase their production of Wampum which they then used to trade for goods and services with other Indian tribes so the trade was not as one-sided as we moderns think.
Its like a little boy has magic pocket money tokens which the rest of the world wants, and he is addicted to just wishing them into existence for ice cream.
The rest of the world doesn’t want to use the tokens but usually when they try their own kind it fails and they are even more desperate for the little boys tokens. They sometimes screw up their own tokens so badly they have to go through landfill to eat.
Even the little boy is sick of it because he drops most of the ice cream on the floor anyway and sometimes he thinks its not really good for him and he wants to make his own healthier snacks by himself.
So the little boy has come up with a solution which is to make such a stupendous amount of the magic tokens that everything gets fixed!
It’s a function of math. If one country (China) runs forced savings (by forcing it’s population to under consume) another country must run a deficit. Michael Pettis explains this all very well on his blog site though some of the math and concepts are fairly advanced and not easily grasped until you’ve read several to understand all the terms.
I generally agree with Pettis. He taught me most of what I know about trade.
From his post “MMT Heaven and Hell for China and the US”
“So how do these insights apply to the world today? If they so choose, the U.S. and European governments should be able to create money or debt with no ill effects if the proceeds were used to fund needed infrastructure or to reverse income inequality by increasing the incomes of the poor and middle classes. Either way, productive investment would rise faster than debt or the money supply, as would the total value of goods and service produced.”
That says it all in the present situation and I happy to see that we are going towards these measures.