The Feb Trade Deficit was $1.2b above expectations at $39.7b and up from $37b in Jan. The rise in the deficit was due to a 1.7% gain in imports which offset a .2% rise in exports. The import gain was led by semi’s, computer related items, crude oil, pharmaceuticals and services. The modest export gain was led by semi’s, auto’s and industrial supplies. Bottom line, with the slowly improving US economy and US consumers beginning to spend again, whether due to pent up demand or something more, the US Trade Deficit is back near its highest level since Dec ’08. The key to long term economic health though will be a greater contribution from exports and less on borrowing and spending all over again (US savings rate down to 3.1%, the lowest since Dec ’08). The higher than expected number today, with all else equal, will lead to a .1 of a % pt decrease in Q1 GDP estimates.
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