The US reported its trade deficit this morning. The annualized trade deficit is now running at $550 billion. You may remember that one of the reasons for a low interest rates and a declining currency was to spur exports. It seems exports are actually declining. WTF!!! How low does the USD need to go to spur exports? It looks like we are about to find out. The dollar declined after the report. It is now trading at its lowest level versus a basket of currencies since August 2008 during the worst financial crisis in history. It declined to 1.45 versus the Euro this morning. It has fallen 18% versus the Euro since June of 2010. Inch by inch, foot by foot, we get closer to the day of reckoning. It will happen without warning. A panic will ensue as everyone tries to exit the USD simultaneously. The picture won’t be pretty.
USD versus basket of currencies DXY
USD versus Euro
US Trade Deficit Deteriorates As US Import Price Index Surges By Most Since June 2009
Submitted by Tyler Durden on 04/12/2011 08:43 -0400
Another month, and another confirmation that the US export segment is non-existent. In February the US posted a $45.8 billion trade deficit compared to $47 billion in January, but worse than expectations of $44 billion. Importing our way to prosperity and #Winning_the_Future continues. Comparing the Chinese reported trade surplus with the US and the US reported trade deficit with China we get just a 100%+ difference: $7.8 billion versus $18.8 billion. Gotta love two administrations that just make up numbers trying to reconcile their fraud. This number also means that Q1 GDP will see another major revision lower. And so will Q2, Q3 and so forth, leading to QE3. And while we are at it, let’s just make it stagflation: the US import price index surged from 1.4% to 2.7% on expectations of 2.1%: the largest rise since June 2009.
From the report:
Goods and Services
- Exports decreased to $165.1 billion in February from $167.5 billion in January. Goods were $118.0 billion in February, down from $120.4 billion in January, and services were $47.2 billion in February, up from $47.1 billion in January.
- Imports decreased to $210.9 billion in February from $214.5 billion in January. Goods were $177.3 billion in February, down from $180.7 billion in January, and services were $33.6 billion in February, down from $33.8 billion in January.
- For goods, the deficit was $59.3 billion in February, down from $60.3 billion in January. For services, the surplus was $13.6 billion, up from $13.3 billion in January.
Goods by Category (Census basis)
- The January to February decrease in exports of goods reflected decreases in automotive vehicles, parts, and engines ($1.0 billion); industrial supplies and materials ($0.6 billion); other goods ($0.5 billion); capital goods ($0.3 billion); consumer goods ($0.2 billion); and foods, feeds, and beverages ($0.2 billion).
- The January to February decrease in imports of goods reflected decreases in automotive vehicles, parts and engines ($2.3 billion); capital goods ($2.1 billion); industrial supplies and materials ($1.4 billion); and other goods ($0.1 billion). Increases occurred in consumer goods ($2.3 billion) and foods, feeds, and beverages ($0.1 billion).
Services by Category
- Exports of services were virtually unchanged from January to February. An increase in other private services ($0.1 billion), which includes items such as business, professional, and technical services, insurance services, and financial services, was partly offset by a decrease in other transportation ($0.1 billion), which includes freight and port services. Changes in the other categories of services exports were small.
- The January to February decrease in imports of services was more than accounted for by decreases in other transportation ($0.2 billion) and travel ($0.1 billion). An increase in other private services ($0.1 billion) was partly offsetting. Changes in the other categories of services imports were small.
Goods by Geographic Area (Not Seasonally Adjusted)
- The goods deficit with China decreased from $23.3 billion in January to $18.8 billion in February. Exports increased $0.4 billion (primarily passenger cars, soybeans, and steelmaking materials) to $8.4 billion, while imports decreased $4.1 billion (primarily computers and accessories; toys, games, and sporting goods; and electric apparatus) to $27.3 billion.
- The goods deficit with the European Union increased from $5.6 billion in January to $6.9 billion in February. Exports decreased $0.3 billion (primarily nonmonetary gold; soybeans; and artwork, antiques and stamps) to $20.0 billion, while imports increased $1.1 billion (primarily pharmaceutical preparations, civilian aircraft, and household goods) to $26.9 billion.
- The goods deficit with the Japan increased from $5.0 billion in January to $5.2 billion in February. Exports increased $0.3 billion (primarily metallurgical grade coal; civilian aircraft, engines, equipment, and parts; and corn) to $5.3 billion, while imports increased $0.6 billion (primarily automotive parts and accessories, computer accessories, and motorcycles and parts) to $10.5 billion.