Relevant and even prescient commentary on news, politics and the economy.

Record High Trade Deficit

Trade Deficit Increases 5.6% to Record High in March on Rising Imports of Consumer Goods, MarketWatch666, Commenter RJS

Our trade deficit was at another record high in March, 5.6% higher than in February, as both our imports and exports increased, but our imports increased by more. The Commerce Department’s report on our international trade in goods and services for March indicated that our seasonally adjusted goods and services trade deficit rose by $3.9 billion to $74.4 billion in March, from a February deficit that was revised from the originally reported record $71.1 billion to $70.5 billion. In rounded totals, the value of our March exports rose by $12.4 billion to $200.0 billion on a $11.7 billion increase to $142.9 billion in our exports of goods and a $0.8 billion increase to $57.1 billion in our exports of services, while our imports rose by $16.4 billion to $274.5 billion on a $15.3 billion increase to $234.4 billion in our imports of goods and a $1.1 billion increase to $40.0 billion in our imports of services. Export prices averaged 2.1% higher in March, which means the change in our real exports was less than than the nominal increase by that percentage, while import prices were 1.2% higher, meaning that our real imports were likewise smaller than than their nominal value by that percentage…

1st Quarter GDP Grew at a 6.4% Rate on Government Stimulus Spending

1st quarter GDP; March incomes & outlays, and March durable goods

Marketwatch 666, Commenter R.J.S.

Our economy grew at a 6.4% rate in the 1st quarter, quite a bit stronger than during the fourth quarter, as stimulus supported growth in personal consumption of goods and increased federal government consumption outlays more than offset weaker private investment, shrinking inventories, falling exports, and the negative impact of rising imports…the Advance Estimate of 1st Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 6.4% annual rate from the output of the 4th quarter of 2020, when our real output grew at a 4.3% real rate…in current dollars, our first quarter GDP grew at a 10.72% annual rate, increasing from what would work out to be a $21,494.7 billion a year output rate in the 4th quarter of last year to a $22,048.9 billion annual rate in the 1st quarter of this year, with the headline 6.4% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 4.1%, aka the GDP deflator, was computed from the price changes of the components and applied to their current dollar change…. 

As is usual with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have averaged +/-0.6% in either direction before the third estimate for the quarter is released, which will be two months from now….note that March construction, March trade in services, and non-durables inventory data have yet to be reported, and that the BEA assumed a $15 billion increase in exports of services, a $2.5 billion increase in imports of services, a $7.6 billion increase in residential construction, a $1.2 billion decrease in non-residential construction, a $2.9 billion increase in public construction, and a $34.5 billion decrease in nondurable manufacturing inventories for March before they estimated 1st quarter output (see the Key source data and assumptions excel file that accompanies this report for more specific details).

Gasoline demand at an 8 month high

and imports of distillates at a 26 week low.. Commenter R.J.S.

Oil prices moved lower this week on rising Covid cases global​ly ​and on a surprise increase in US crude supplies . . .  after rising 6.1% to $63.13 a barrel last week  on strong economic data and on upwardly revised demand forecasts, the contract price of US light sweet crude for May delivery opened lower on Monday on trader’s jitters over surging Covid cases in Europe and India, but recovered to finish with a 25 cent gain at $63.38 a barrel as a weaker dollar supported prices by making oil cheaper for holders of other currencies. Oil prices continued higher early Tuesday, hitting a one month high of $64.30​,​ following reports of an outage in Libya, but pulled back on fears that India, (third-largest oil importer) would impose restrictions as coronavirus infections and deaths surged to record highs. and settled 94 cents lower at 62.44 a barrel, as trading in the May oil contract expired. Oil reports now referencing  the contract price of US light sweet crude for June delivery, which had closed down 74 cents at 62.67 a barrel on Tuesday, opened lower on Wednesday after the American Petroleum Institute reported an unexpected increase in crude supplies, and then tumbled to close $1.32, or more than 2% lower at $61.35 per barrel. This came after the EIA confirmed that crude oil stockpiles had unexpectedly edged higher last week. Oil prices continued falling early Thursday on expectations that rising coronavirus cases in India and Japan would cause demand to decline, but recovered to close 8 cents higher at $61.43 per barrel as traders noted that overall oil demand remained robust in the two largest oil markets, the U.S. and China. Oil prices moved higher again on Friday on strong economic reports from Europe and the US and settled with a gain of 71 cents at $62.14 a barrel but still finished with a loss of 1.6% on the week​,​ as spreading coronavirus cases in countries such as India tempered positive signs out of the U.S. and Europe.

Retail Sales Rose 9.8% in March as Consumers Spent Stimulus Checks

March consumer prices, retail sales, industrial production, & new home construction; February’s business inventories RJS at MarketWatch 666

Seasonally adjusted retail sales increased by 9.8% in March, the second largest jump on record, after retail sales for January and February were both revised higher…the Advance Retail Sales Report for March (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled a record high $619.1 billion during the month, which was up by 9.8 percent (±0.5%) from February’s revised sales of $529.3 billion and 27.7 percent (±0.7 percent) above the adjusted sales in March of last year… February’s seasonally adjusted sales were revised from $561.7 billion to $563.7 billion, while January’s sales were revised from $579.1 billion to $579.552 billion; as a result, the percent change from January to February was revised from down 3.0 percent (±0.5 percent) to down 2.7 percent (±0.2 percent)….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were actually up 27.3%, from $493,085 million in February to $627,885 million in March, while they were up 30.4% from the $481,513 million of sales in March of a year ago…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the March Census Marts pdf….the first double column of this table shows us the seasonally adjusted percentage change in sales for each kind of business from the February revised figure to this month’s March “advance” report in the first sub-column, and then the year over year percentage sales change since last March in the 2nd column; the second double column pair below gives us the revision of the February advance estimates (now called “preliminary”) as of this report, with the new January to February percentage change under “Jan 2021 r” (revised) and the February 2020 to February 2021 percentage change as revised in the 2nd column of that pair…(for your reference, our copy of this same table from the advance February estimate, before this month’s revisions, is here)…. lastly, the third pair of columns shows the percentage change of the first 3 months of this year’s sales (January, February and March) from the preceding three months of the 4th quarter (October thru December) and from the same three months of the 1st quarter a year ago….as you can see from that fifth column, overall retail sales for the 1st quarter of 2021 were roughly 7.7% higher than the 4th quarter of 2019, which implies that nominal personal consumption of goods for the 1st quarter will be up by roughly the same amount, before any inflation adjustments…

That Prices were up the most since 2012 is probably also noteworthy . . .

CPI Rose 0.6% in March on Higher Prices for Energy and Transportation Services, R.J.S, MarketWatch 666

The consumer price index rose 0.6% in March, the largest monthly increase since August 2012, as higher prices for fuel, utilities, transportation services, financial services, and used vehicles were only slightly offset by lower prices for clothing and for communication commodities…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices averaged 0.6% higher in March, after rising by 0.4% in February, 0.3% in January, 0.2% in December, 0.2% in November, 0.1% in October, 0.2% in September, 0.4% in August, by 0.5% in July and by 0.5% in June, but after falling by 0.1% last May, by 0.7% last April and by 0.3% in March of last year….the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 263.014 in February to 264.877 in March, which left it statistically 2.6198% higher than the 258.678 reading of March of last year, which is reported as a 2.6% year over year increase, up from the 1.7% year over year increase reported a month ago….with higher prices for energy a major factor in the overall index increase, seasonally adjusted core prices, which exclude food and energy, were only up by 0.3% for the month, as the unadjusted core price index rose from 270.696 to 271.713, which left the core index 1.6464% ahead of its year ago reading of 267.268, which is reported as a 1.6% year over year increase, up from the 1.3% year over year core price increase that was reported for February, but still little changed from the 1.6% the year over year core price increase that was reported for December of 2020 . . .

Retail Sales Fell 3.0% in February After January Sales Were Revised 1.9% Higher

Commenter r. j. s. at MarketWatch666

Retail Sales Fell 3.0% in February After January Sales Were Revised 1.9% Higher

Seasonally adjusted retail sales decreased 3.0% in February after retail sales for January were revised 1.9% higher . . . the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $561.7 billion during the month, which was 3.0 percent (±0.5%) lower than January’s revised sales of $579.1 billion, but still 6.3 percent (±0.7 percent) above the adjusted sales in February of last year…January’s seasonally adjusted sales were revised up from $568.2 billion to $579.1 billion, while December’s sales were revised from $539.7 billion down to $538,338 million; as a result, the December to January change was revised up from up 5.3 percent (±0.5 percent) to up 7.6% (±0.3%) . . . the downward revisions to December sales would indicate that 4th quarter personal consumption expenditures will be revised lower at about a $5.5 billion annual rate, which would thereby reduce 4th quarter GDP by about 0.11 percentage points…estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were down 5.4%, from $519,588 million in January to $491,356 million in February, while they were up 2.4% from the $479,868 million of sales in February of a year ago . . .  

January Exports and Imports

Commenter RJS, MarketWatch 666 on the Goods and Services Trade Deficit.

International Trade in Goods and Services, March 5, 2021

Our trade deficit rose 1.9% in January, as both the value of our exports and our imports increased, but the value of our imports increased by more…the Commerce Dept report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $1.2 billion to a rounded $68.2 billion in January, from a December deficit that was revised from $66.6 billion to $67.0 billion….the value of our January exports rose by $1.8 billion to $191.9 billion as a $2.1 billion increase to $135.7 billion in our exports of goods was partly offset by a decrease of $0.3 billion to $56.3 billion in our exports of services, while our imports rose by $3.1 billion to $260.2 billion as a $3.4 billion increase to $221.1 billion in our imports of goods was partly offset by a $0.3 billion decrease to $39.0 billion in our imports of services…export prices averaged 2.5% higher in January, which means the relative real increase in exports for the month was less than the nominal increase by that percentage, while import prices averaged 1.4% higher, meaning the increase in real imports was smaller than the nominal dollar decrease reported here by that percentage……