US Trade Deficit in Goods Swells to a Whopping $82.9 Billion

Mish

The US international trade deficit jumped again in August.

Advance Indicators

This morning the Census bureau reported on Advance Economic Indicators for August. 

  • Advance International Trade in Goods: The international trade deficit was $82.9 billion in August, up $2.8 billion from $80.1 billion in July. Exports of goods for August were $118.3 billion, $3.2 billion more than July exports. Imports of goods for August were $201.3 billion, $6.0 billion more than July imports.
  • Advance Wholesale Inventories: Wholesale inventories for August, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $637.0 billion, up 0.5 percent (±0.2 percent) from July 2020, and were down 5.0 percent (±0.7 percent) from August 2019. The June 2020 to July 2020 percentage change was revised from down 0.3 percent (±0.2 percent) to down 0.1 percent (±0.2 percent).
  • Advance Retail Inventories: Retail inventories for August, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $599.7 billion, up 0.8 percent (±0.2 percent) from July 2020, and were down 10.1 percent (±0.5 percent) from August 2019. The June 2020 to July 2020 percentage change was unrevised from the preliminary estimate of up 1.2 percent (±0.2 percent).

Goods vs Econoday Consensus

The US goods deficit (census basis) is expected to deepen to a very large $82.6 billion in August versus $81.2 billion in July (revised from $79.3 billion). Goods imports were down 7.4 percent year-over-year in August and were down 0.9 percent relative to February; goods exports have been falling more steeply, down 15.7 percent on the year and down 16.4 percent versus February.

The deficit was a bit larger than expected but the economists got this one essentially correct.

Goods and Services 

Trade Deficit in Goods and Services 2020-07

The advance report only covers goods. The above chart shows goods and services through July. 

Since the US generally runs a surplus in services, the net impact will be less than today's report of -82.9 billion.

However, the total deficit is sure to get worse. 

Promises Promises

Trump pledged to shrink the deficit. Instead it's heading towards the depths of the Bush and Obama years.

Also note that trade deficits tend to shrink in recessions. Instead, it widened.

Mish

Comments (20)
No. 1-8
Mish
Mish

Editor

Regarding long comments and getting logged out

Replay from the Maven:

For the first issue with longer comments, it sounds like his browser is refreshing automatically, causing his comments to disappear. I wasn't able to reproduce this on my end when typing a longer comment directly into the comment box over a 10 minute period, so it might be something he has installed or dependent on the type of browser he's using. Could you have him open the site in incognito mode and see if that gets rid of the problem? If it does, there's likely something installed in his browser like an add-on causing this to happen. This could also be a cache-related problem though, so I would suggest clearing the cache as well to be sure.

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Zardoz
Zardoz

Are we winning yet?

PecuniaNonOlet
PecuniaNonOlet

Wait what? FOUR years of trump tariffs, new trade deals, grandstanding, threats, and bragging and we are still in the same place?

Casual_Observer
Casual_Observer

How long before we find out the tariff money actually went straight from the US treasury into Trump's bank account ?

Augustthegreat
Augustthegreat

What do you expect from an Artist of Serial Bankruptcies and a Stable Genius of the Greatest Conman-ship?

Eddie_T
Eddie_T

I've been thinking about this one all day....and what occurs to me is that it was fairly stupid in the first place.....to think that the trade wars were going to ever reduce trade deficits.....

Like you could wave a magic wand and reverse more than 30 years of shifting towards global trade...and like all the investments the multi-nationals made in China were suddenly going to not matter anymore?

I once considered Peter Navarro to be a smart guy.....I read his books on trading maybe 20 years ago. Something like that. When Trump announced he was bringing in Navarro...I thought it was a bright spot.....since all his cabinet picks seemed to be from a list he got from Charles Koch..but Navarro has not impressed me. Just another sycophant these days trying to lay down cover for The Donald's latest stupid tweets.

There is a difference between complaining about China...and actually doing something about the problems.

There is a lot of ingenuity still in this country.....maybe we figure out how to find new markets and new products.....but trade won't come from throwing tantrums and grandstanding. It will come from doing things and making things other countries can't do..or doing them cheaper and better.

Carl_R
Carl_R

Mish, some time ago, if I understood you correctly, you posted that if the US runs a Fiscal deficit, it has to eventually run a trade deficit. This seems to be a consequence you expected. Even aside from that, it's not surprising. Massive fiscal stimulus kept spending high, and most spending is on goods made overseas. Thus, high fiscal stimulus is going to lead to high trade deficits, one way or the other.

Realist
Realist

Trump ”might” be smart enough to understand that reducing the trade deficit with his policy of tariffs and trade wars is hopeless. However, it is likely he probably only cares about appealing to his base with his moronic policies in order to get their adoration and votes.

It would actually be scary if he truly believed his tariff policies would work to reduce the deficit and bring back jobs.

After all, he himself has been sourcing most of the purchases for Trump organizations from outside the US for decades.


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