Imports of consumer goods increased by 38%. Imports are not a sign of economic strength, but put a strain on GDP.
By Wolf Richter for WOLF STREET.
The U.S. goods trade deficit with the rest of the world exploded by 24.6% from March 2019 and 38% from March 2020 to $ 91 billion, another worst in a long line of worst-case milestones of all time the Statistics Office today.
Trade deficits are not a sign of a growing economy or any kind of economic strength, but a sign of a rampant relocation of the production of consumer and industrial goods by American corporations to low-wage countries. Trade deficits weigh on GDP:
Imports from the rest of the world rose 8.9% from March 2019 and 20.6% from March 2020 to another extremely worst level of $ 233 billion. Imports are negative in the GDP calculation and put a strain on GDP. But they stimulate other countries’ economies.
Imports by main category in billion US dollars and percentage change compared to March 2020. Note that consumer goods imports have skyrocketed by 38% year-on-year. That’s part of where the Voices went:
- Consumer Goods: $ 65 billion, + 38%
- Capital goods: $ 63 billion, + 17%
- Industrial Supplies, Petroleum, Petroleum Products: $ 50 billion, + 22%
- Automobiles etc: $ 30 billion, + 8%
- Food, Feed, and Beverage: $ 14 billion, + 9%
- Other goods: $ 10 billion, + 3%.
The votes were well used to stimulate manufacturers in other countries and the offshore units of Corporate America after two decades or rampant offshoring by Corporate America, including by such indestructible as the US automakers who import components and entire vehicles, or consumer electronics manufacturers like Apple or retailers like Walmart, who import almost everything except groceries, and of course Amazon’s platform, on which foreign manufacturers can sell directly to US consumers.
Exports from the US to the rest of the world remained unchanged from March 2019 at 142 billion US dollars and increased by 11.5% from the beaten levels of March 2020. There is not much to add to exports:
Exports by main category in billion US dollars and percentage change since March 2020. The largest category, industrial supplies, includes exports from the US fracking industry: petroleum and petroleum products. Inflated exports of food, fees, and beverages accounted for only 9% of total U.S. exports ($ 142 billion) at $ 13 billion:
- Industrial Supplies, Petroleum, Petroleum Products: $ 51 billion, + 19%
- Capital goods: $ 42 billion, -1.2%
- Consumer Goods: $ 17 billion, + 18.1%
- Food, Feed and Beverage: $ 13 billion, + 21%
- Automobiles etc: $ 13 billion, + 15%
- Other merchandise: $ 6 billion, + 4.3%.
These are the results of corporate America’s globalization that has been encouraged for decades. For far too long it has been widely touted as a good thing as booming US services were supposed to close the trade deficit in goods. But that turned out to be a joke.
Recently, even Fed Chairman Jerome Powell blamed globalization for some of the distortions in the US, including the labor market and horrific wealth inequality, rather than recognizing the Fed’s role in those distortions.
And in addition to these structural conditions that caused the long trend of rising trade deficits, came the tsunami of government stimulus payments, from the notorious Voices to myriad other programs, and the postponement of spending on domestic and even local services, such as bars, ball games, Concerts, conferences, cruises, hotel stays and flights to durable and less durable goods, the majority of which are imported.
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