Imports into the United States fell sharply again in February

TO BE NOTED: From EconomPic Data:

"Good News Alert! Imports Down, Exports Up, Trade Balance Crash

Marketwatch reports:

Imports into the United States fell sharply again in February and the U.S. trade deficit narrowed to $26 billion, the smallest since 1999, the Commerce Department reported Thursday. Imports of goods and services fell 5.1% to $152.7 billion, the lowest in more than four years. Exports of goods and services rose 1.6% to $126.8 billion, the first increase since July. The February deficit was much smaller than the $36.2 billion forecast by economists surveyed by MarketWatch. After adjusting for price changes, the real trade gap in goods fell in February to the lowest level since May 2001.

Trade Balance


Import / Export Breakdown by Goods / Services


Trade Balance by Goods / Services


Source: Census

Posted by Jake at 5:36 AM

"signaling businesses are cutting back on investments as the recession deepens. "

From Bloomberg, more evidence that I am correct about there being a Proactivity Run, and the increase in Productivity being a consequence of it:

"Factory Orders in the U.S. Tumble More Than Forecast (Update1)

By Timothy R. Homan

Jan. 6 (Bloomberg) -- Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back( PROACTIVELY. IN OTHER WORDS, A PACE FASTER THAN FALLING DEMAND. ) on investments as the recession deepens.

Demand fell 4.6 percent after a revised 6 percent decrease in October that was larger than previously estimated, the Commerce Department said today in Washington. The back-to-back decline was the biggest since records began in 1992.

Companies are likely to pare spending further as access to credit dries up and global demand slows. President-elect Barack Obama has proposed a two-year economic stimulus package, costing as much as $850 billion, with an emphasis on infrastructure projects that may give manufacturing a boost.

“Consumer-durable spending is way down as credit is more difficult to get,” said Douglas Smith, chief economist for the Americas at Standard Chartered Bank in New York, said in an interview with Bloomberg Television. “With weakness overseas, you’re also seeing fewer orders for U.S. manufactured goods.”

Factory orders were forecast to fall 2.3 percent, after a previously reported 5.1 percent drop the prior month, according to the median estimate of 60 economists surveyed by Bloomberg News. Projections ranged from declines of 0.4 percent to 6.5 percent.

Factory sales plunged 5.3 percent in November, the biggest drop on record.

Orders for durable goods, which are those meant to last at least three years and make up just less than half of total factory demand, dropped 1.5 percent. Commerce estimated the decline at 1 percent in a Dec. 24 report.

Aircraft Demand

Boeing Co., the world’s second-biggest commercial-airplane maker, said it received 7 orders for aircraft in November, down from 14 the previous month. The Chicago-based company resolved an 8-week strike on Nov. 1 by 27,000 machinists that may have weighed on that month’s orders.

Bookings for autos and parts declined 0.1 percent. U.S. automakers remain in a slump. Automakers sold 10.3 million light vehicles at an annual rate in December, capping the worst year for the industry since 1982, according to industry figures released yesterday.

Excluding transportation gear, bookings dropped for a fourth consecutive month.

Demand for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 3.9 percent, less than Commerce estimated in last month’s durable goods report. Shipments of those goods, used to calculate gross domestic product, dropped 0.2 percent, wiping out the previously estimated gain.

Plunging Prices

Orders for non-durable goods plunged 7.4 percent, paced by declining demand for petroleum, chemicals and plastics that partly reflecting falling commodity costs. Orders for petroleum and coal products fell 21 percent.

The bad news probably continued last month. Factory activity contracted in December at the fastest pace since 1980, the Tempe, Arizona-based Institute for Supply Management said last week. The group’s measure for new orders reached its lowest level since record-keeping began in 1948, and prices slid the most since 1949.

Worthington Industries Inc., the largest U.S. maker of steel frames for cars and buildings, on Dec. 18 reported a second-quarter loss of $159.5 million compared with a $14.7 million profit a year earlier as the global recession sapped demand for automobiles and buildings.

The U.S. economy contracted at a 0.5 percent annual rate in the third quarter, the Commerce Department said Dec. 23. The economy is projected to shrink at a 4.3 percent annual rate, the biggest contraction since 1982, according to the median estimate of 51 economists surveyed last month by Bloomberg."

All these downturns are a Proactivity Run, meant to shed costs faster and in a larger amount than the actual sales decline. Obviously cutting back on orders is part of cutting back on costs. The intertwined action of all the variables is one reason the cutbacks are so large.

"The cost of living in the U.S. probably fell in October by the most in almost sixty years"

Well, Bloomberg says this:

"The cost of living in the U.S. probably fell in October by the most in almost sixty years, while manufacturing and homebuilding sank deeper into a recession, economists said before reports this week.

Consumer prices probably dropped 0.8 percent last month, the most since 1949, according to the median estimate in a Bloomberg News survey. Builders broke ground on the fewest houses in at least a half century and factory output weakened further, other reports may show.

Commodity costs plunged in October when the economy, which descended last quarter, went into freefall as credit and financial markets collapsed. Slumping sales are forcing retailers to lower prices, giving the Federal Reserve scope to keep cutting interest rates to limit the damage.

``Tumbling energy and commodity prices have altered the inflation landscape,'' said Ryan Sweet, a senior economist at Moody's Economy.com in West Chester, Pennsylvania. ``More rate cuts are needed as the economy is sinking deeper into recession.''

The Labor Department's consumer-price report is due Nov. 19. Fuel, clothing and auto costs probably dropped last month as sales at U.S. retailers fell 2.8 percent, the most since records began in 1992, economists said.

The slump in crude oil is feeding through to prices at the pump. The average cost of a gallon of regular gasoline plunged 17 percent last month to $3.08, according to AAA."

Here's the thing: Shouldn't the drop in the price of gas and other commodities act as a stimulus?

"Commodity Deflation

``We are seeing the fallout of global recession on inflation,'' said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. ``In commodity prices, it's leading to deflation.''

Core prices, which exclude food and energy, rose 0.2 percent last month after a 0.1 percent gain the prior month, according to the survey median.

A report from the Labor Department on Nov. 18 may foreshadow the drop in retail costs. Wholesale prices fell 1.8 percent last month, the most since records began in 1947, according to economists surveyed.

As sales fall, manufacturers are cutting output and firing workers. Ford Motor Co. plans temporary shutdowns at nine North American plants this quarter after an 18 percent drop in U.S. sales this year, Angie Kozleski, a spokeswoman for the Dearborn, Michigan-based automaker, said last week.

Auto cutbacks probably pushed down manufacturing output last month, economists said a report from the Fed tomorrow may show. Overall industrial production, which includes factories, mines and utilities, rose 0.2 percent in October, led by a resumption of work at Gulf Coast refineries after Hurricane Ike shut down oil rigs the prior month, economists forecast."

I'm going to post about Yves Smith's post on this.

"Hurricane Rebound

A report from the New York Fed the same day may show manufacturing in the state contracted this month at the fastest pace since at least 2001. A similar report from the Philadelphia Fed on Nov. 20 may show regional activity shrank for an 11th time in 12 months.

The economic slump will intensify this quarter and persist into the first three months of 2009, making it the longest downturn since 1974-75, according to economists surveyed this month.

The housing recession at the heart of the economic downturn shows no signs of letting up. New-home starts in October dropped to a 780,000 annual pace, the lowest level since records began in 1959, the Commerce Department is forecast to report Nov. 19."

Here's a case where a weather word can be used both literally and metaphorically.

"Outlook Dims

A gauge of the economy's course will point to continued weakness, economists project a private report on Nov. 20 will show. The New York-based Conference Board's index of leading economic indicators probably fell 0.6 percent after increasing 0.3 percent in September.

Central bankers are battling to cushion the economy from the worst financial crisis in seven decades.

``Policy makers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant,'' Fed Chairman Ben S. Bernanke said Nov. 14 at a panel discussion in Frankfurt hosted by the European Central Bank.

Heads of state of the Group of 20, which represents almost 90 percent of world output, met in Washington Saturday to lay the framework for coordinated actions to stem the global recession."

They must be reading Roubini.

"but most retailers will feel the bite of weaker consumer spending.”

From the WSJ, the Holiday Season doesn't look good. We need economists to tell us that, do we?:

"Another day, another indication of a dire holiday season for retailers.

The Commerce Department reported today that retail sales tumbled 2.8% in October, the sharpest decline on record. Although the bulk of the drop came from lower gas and car sales, broad weakness was reported. Clothing sales fell 1.4% from the previous month, while sales of sporting goods were off by 1.6%. Furniture and electronics sales lost 2.5% and 2.3% m/m respectively"

Here's my comment:

“The weak October sales also foreshadow a miserly holiday shopping season for most retailers,” said Robert Dye an economist as PNC. “Wal-Mart and other bargain stores may gain market share as shoppers avoid higher-end department stores, but most retailers will feel the bite of weaker consumer spending.”

Don’t blind me with science, but “miserly”, which would signal a huge contraction, and “feel the bite”, which doesn’t necessarily determine its severity, aren’t terribly specific predictions.

Comment by Don the libertarian Democrat - November 14, 2008 at 3:26 pm