Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Yearly Trade Deficit Sets New Record Despite MoM Decrease

  by    0   1

The April trade deficit came in at -$87B. This was the first time in 5 months that a new record had not been set (pink dot below). The Net Goods Deficit remained below -$100B for the fifth straight month. This Trade Deficit comes on the heels of an absolutely massive -$108B Deficit in March. It’s likely that some of the April deficit was counted in March, so expect a rebound in the May number.

Figure: 1 Monthly Plot Detail

The table below provides detail.

Monthly Trade Deficit

  • Exports grew in both Goods (+3.5%) and Services (+3.3%)
  • Imports in goods fell 4.4% but is still up 22.7% from a year ago
  • On a Net basis, the Goods Deficit fell 15% while the Services Surplus expanded 7.8%
      • Total Net shows a fall of 19.1% but is still up 32.5% YoY

Looking at Trailing Twelve Month:

  • The Total Net Deficit reached a new record of $953B
      • This broke the $937B record last month by almost $16B
      • YoY, the Net Deficit is up 29.7%
      • Compared to April 2020, the TTM Deficit is up 74.1%
  • The TTM Services Surplus has fallen 9.6% from $259B to $234B over the last year
      • Over that time, the Goods Deficit has increased 19.4% from $994B to $1.19T

While the monthly number does show a reduction, the annual number catches the bigger trend which is way up! The only thing that could keep the monthly deficit from setting new records is inflation starting to eat up more disposable income.

Figure: 2 Trade Balance Detail

Historical Perspective

Zooming out and focusing on the Net numbers shows the longer-term trend and shows the magnitude of the current move. The spike down on the far-right side shows how quickly the deficit has exploded. This plot also shows how much larger the Goods Deficit is compared to the Services Surplus. The Deficit spiked back up but still sits well below where it was just a few months ago.

Figure: 3 Historical Net Trade Balance

The chart below zooms in on the Services Surplus to show the wild ride it has been on in recent months. It compares Net Services to Total Exported Services to show relative size. After hovering near 35% since 2013, it dropped to 26% in Aug 2021, recovered to 29.6%, but has fallen back down to 27%.

Figure: 4 Historical Services Surplus

To put it all together and remove some of the noise, the next plot below shows the Trailing Twelve Month (TTM) values for each month (i.e., each period represents the summation of the previous 12-months).

Figure: 5 Trailing 12 Months (TTM)

Although the Net Trade Deficits are hitting all-time records in dollar terms, it can be put in perspective by comparing the value to US GDP. As the chart below shows, the current records are still below the 2006 highs before the Great Financial Crisis.

That being said, the current 3.91% is the highest since April of 2009 and up from 2.53% in March 2020.

Figure: 6 TTM vs GDP

The chart below shows the YTD values. Because the current month is April, this chart only shows four months, but already 2022 is well above prior years by a significant margin. Total 2022 Imported Goods is already larger than the combined Imported Services and Imported Goods from 2021.

Figure: 7 Year to Date

What it means for Gold and Silver

The US continues to run massive deficits with its trading partners. The current month is a dip in a longer-term trend. How long will countries continue to accept paper dollars for physical goods? Eventually, the dollars being exchanged for goods will come flooding back to the US. This will likely exacerbate the inflation problem. Gold and silver offer excellent protection in such an environment.

Data Source: https://fred.stlouisfed.org/series/BOPGSTB

Data Updated: Monthly on one month lag

Last Updated: Jun 07, 2022, for Apr 2022

US Debt interactive charts and graphs can always be found on the Exploring Finance dashboard: https://exploringfinance.shinyapps.io/USDebt/

Download SchiffGold's 401k IRA Rollover Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Fed Misses the Target Again

The Fed managed to reduce its balance sheet by $45 billion last month. The majority of this was in Treasuries of 1-5 year maturities with a reduction of $55B. The next biggest reduction was in mortgage-backed securities MBS totaling $20 billion. This fell short of the target of $35 billion. In fact, the Fed has […]

READ MORE →

Rebound in Money Supply Will Prove Too Little, Too Late

Seasonally Adjusted Money Supply in May increased $131B. This is the first growth in adjusted M2 since last July and the largest increase since December 2021.

READ MORE →

The Technicals: Gold Correction Is at or Near Completion

With a hawkish Fed and dollar strength, gold has dropped below $1,950 an ounce, but the technicals appear to indicate that we are at or near the end of a correction. The technical analysis last month was published when gold was around $1975 and concluded: The indicators are now mostly neutral with a bearish lean. There are […]

READ MORE →

Comex Countdown: The Pressure Grows in Silver and Platinum

June is wrapping up strong for gold at the COMEX with 20,101 contracts being delivered. There are still 583 contracts open that have not been delivered, but the majority of the contracts have been completed. Meanwhile, were seeing more and more stress on silver and platinum.

READ MORE →

Comex Now Has 28 Paper Claims for Each Physical Ounce of Registered Silver

The bleed of metal from COMEX vaults has resumed and silver inventories have hit record lows with 28 paper claims for each ounce of physical silver. This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical […]

READ MORE →

Comments are closed.

Call Now