U.S. Trade Deficit Shrinks With April Imports Dropping
The U.S. Census Bureau and U.S. Bureau of Economic Analysis reported a SHARP drop in the trade deficit in the month of April. The trade deficit narrowed down to just $87.1 Billion, compared to the $107.7 Billion in the March revised number. Exports were up 3.5%, while imports were down %3.4%.
This comes at a time when the World Bank warns of a painful period of stagflation ahead of us. On Tuesday, the World Bank lowered their global growth forecast for 2022 to just 2.9% from its original forecast back in January of 4.1%. And for reference, 2021 actual growth was a whopping 5.1%. YIKES.
This also coincides with a very sharp drop-off in Germany’s new manufacturing orders, both domestic and foreign. The pain will most certainly be felt on a global scale, which is lending to a strong dollar (strong relative to the rest of the doo doo garbage foreign currencies).
David Malpass, World Bank president, claims that recession will be hard to avoid as virtually every economic headwind in existence is coming at us in very full force. “Changes in fiscal, monetary, climate, and debt policy are needed to counter capital misallocation and inequality.” You mean those same changes (QE infinity & ZIRP) that emphasized the already egregious disparity of wealth throughout the pandemic? Ah, yes. That makes perfect sense. I would just like to know where they find these guys.
Anyways, back to the topic at hand. April exports came in higher across the board, thanks specifically to a rather large jump in soybeans exports, and industrial supplies such as natural gas and petroleum products. This comes as somewhat of a shock to me, as a surging dollar would put even more pressure on already fragile economies overseas, specifically in the Eurozone.
Most of the growth in the dollar has come amidst further interest rate hikes by the Fed, accompanied by decreased macro outlook overseas. I would expect that the exports number for May will be a stark contrast to that seen in April (although not a complete guarantee). And with macro conditions seemingly getting worse day-by-day here in the U.S. the trade deficit will likely to continue to narrow throughout the year, especially given zero-COVID policies instituted by China throughout the month of May.
We have been pumping the breaks as of recent with monetary measures across the board, and that will begin to show in every revised lower global growth forecast. There is still room to go down, and the U.S. (amongst virtually every other country) is on the brink of entering a recessionary period. It might be time to call Kenny Loggins because WE ARE OFFICIALLY IN THE DANGER ZONE.