If you are in the camp that thinks the world is collapsing around us, the February trade deficit probably didn't let you down. The short story, from the New York Times:
The United States trade deficit expanded in February for the third month in a row, reaching a record $61 billion, as the rising cost of oil and America's unrestrained appetite for foreign goods propelled imports to unprecedented heights.
The Commerce Department reported yesterday that imports ballooned to $161.5 billion, $2.6 billion more than in January. Meanwhile, exports remained virtually flat at $100.5 billion. Over all, the nation recorded a $64.7 billion deficit in the trade of goods, slightly tempered by a $3.7 billion surplus in services.
The award for stating the obvious goes to this comment...
"It's an extraordinarily unprecedented trade deficit," said Ernest H. Preeg, a senior fellow at the Manufacturers Alliance/MAPI, a policy research group in Arlington, Va. "It reflects a big imbalance in the global economy."
... and you can always count on someone blaming China:
"China and some other Asian nations continue to keep the dollar artificially high so they can keep their exports to us far higher than they would be without such antimarket manipulations," said Frank Vargo, vice president for international economic affairs of the National Association of Manufacturers, in a statement.
But at least the cooler heads are represented:
Kenneth S. Rogoff, a professor of economics at Harvard, observed that the United States current-account deficit, mainly the trade deficit but also other short-term financial flows like interest payments, amounts to 70 percent to 80 percent of the current-account surpluses of all the other countries in the world put together. "The Asians are not responsible for the lack of savings in the United States," Mr. Rogoff said.
As James at Capital Spectator notes, the interesting news is that forex market yawned. Bloomberg has an explanation:
The dollar rose against the euro as traders said the record U.S. trade deficit was already reflected in the currency's drop last week
Demand for the dollar increased after the Commerce Department reported that the trade gap in February widened to $61 billion. Some traders bought the U.S. currency on relief the shortfall wasn't wider, said Trevor Dinmore, vice president of foreign-exchange strategy at Deutsche Bank AG in London.
"You'd really have needed more than $63 billion to push the dollar lower,'' said Dinmore. "We think the market consensus was more bearish just before the report than the published median forecast'' of $59 billion in a Bloomberg survey.
Hmm. Does that mean we ought to just ignore those forecasts from here on out?
In the darker end of bloggerville, Brad Setser says the worst is yet to come. Calculated Risk agrees, and General Glut says game over: A recession is inevitable.