February U.S. Trade Deficit Remains at Record

Shocker? Absolutely not. The U.S. goods and services deficit was $89.2 Billion in February, which is down less than 0.1% (this is literally negligible, I don’t know why they even felt the need to attribute a percentage amount to it) from the month prior. February exports came in at $228.6 Billion, where imports came in at $317.8 Billion.

And also to nobody’s surprise, the deficit continued to grow on a year-over-year basis, jumping $20.6 Billion from the three months ending in February 2021. Suffice to say I suppose it’s a good thing that we’re not seeing continued growth. As CPI prints continue to pose threats for “growth” this deficit will likely begin to shrink throughout 2022 (although if oil & gas continue to remain at elevated levels, that may not be the case). Because when you adjust these numbers for inflation, we’re actually importing in less goods, just paying a higher price for them. It’s just transitory, though, right?

While crude oil imports grew $1.9 Billion, this number may continue to rise, as the full breadth of the broad increase in energy wasn’t necessarily captured in February, it likely will in March’s trade deficit numbers. Although it was a swing and a miss by your boy in my estimate for automotive vehicles, that number decreased $3.2 Billion, which is fairly significant in my opinion. Economists point to the continued chip shortage that is still going seemingly unsolved, but that doesn’t explain the sharp rise seen in January. It must be fun being an economist.

Imports from China continue to climb, growing $7.9 Billion to a total of $41.2 Billion in February. The recent “outbreak” in China, coupled with increased tensions between Russia and Ukraine will ostensibly put pressure on supply chains to be seen in the March numbers. How that will play out exactly will be interesting to see.

With oil remaining steadily high, and natural gas prices unusually high in the spring time months, we may see our first “real” decline in the deficit within the March number. This will be the first “real” decline since the pandemic started. I’m using the term real parenthetically here because in my mind a decrease of 0.1% is presumably negligent, and these numbers are made up in the end so who even cares?

In any case, book it.