by Mish Shedlock, The Street:
- The international trade deficit in goods was $86.7 billion in February, up $2.1 billion from $84.6 billion in January.
- Exports of goods for February were $130.1 billion, $5.1 billion less than January exports.
- Imports of goods for February were $216.9 billion, $3.0 billion less than January imports.
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The net impact is a record high trade deficit in goods of $86.7 billion as shown by the Advance Trade Data.
Recession Unlike Any Other
The Covid recession is unlike any other.
Normally, trade deficits shrink in recessions. This time, we are hitting new record trade deficits, one after another as shown by the red trade deficit line in my chart.
Why is That?
In two words “Free Money”.
The US has handed out record amounts of free money stimulus in response to Covid.
US consumers have thus been able to maintain spending habits. And they are buying record amounts of foreign junk as shown by the blue imports line on the chart.
In contrast, no other country in the world is handing out similar amounts of free money. So US exports are suffering relative to imports.
Due to free money, personal income in the US rose during the pandemic.
Rising personal income during a recession is another example of how this recession is unlike any other.
I offer the obvious political solution to the export problem: The US needs to give more free money to the rest of the world.