Imports, Trade Deficit in Goods Explode to Worst Ever, Powered by Stimmies and Decades of Rampant Offshoring

Imports of consumer goods spiked by 38%. Imports are not a sign of economic strength, but are a drag on GDP.

By Wolf Richter for WOLF STREET.

The US trade deficit in goods with the rest of the world in March exploded by 24.6% from March 2019 and by 38% from March 2020 to $91 billion, another worst-ever milestone, in a long series of worst-ever milestones, according to the advance estimate by the Census Bureau today.

Trade deficits are not a sign of a growing economy, or any kind of economic strength, but a sign of rampant offshoring of production by Corporate America of consumer and industrial goods to cheap-labor countries. Trade deficits are a drag on GDP:

Imports from the rest of the world jumped by 8.9% from March 2019 and by 20.6% from March 2020 to another huge worst ever level of $233 billion. Imports are a negative in the GDP calculation and are drag on GDP. But they do stimulate the economies of other countries.

Imports by major category in billion dollars and in percent change from March 2020. Note the 38% year-over-year explosion of consumer goods imports. That’s in part where the stimmies went:

  • Consumer Goods: $65 billion, +38%
  • Capital Goods: $63 billion, + 17%
  • Industrial Supplies, petroleum, petroleum products: $50 billion, +22%
  • Automotive Vehicles, etc.: $30 billion, +8%
  • Foods, Feeds, & Beverages: $14 billion, +9%
  • Other Goods: $10 billion, +3%.

So the stimmies were put to good use stimulating the manufacturers in other countries and the offshore entities of Corporate America, after two decades or rampant offshoring by Corporate America, including by such stalwarts as the US automakers which import components and entire vehicles, or consumer electronics makers, such as Apple, or retailers such as Walmart which imports nearly everything except food, and of course Amazon’s platform where foreign manufacturers can sell directly to US consumers.

Exports from the US to rest of the world, at $142 billion, were flat with March 2019, and up 11.5% from the beaten down levels of March 2020. Exports are a positive in the GDP calculation and add oomph to GDP, and so there isn’t much to add from exports:

Exports by major category in billion dollars and in percent change from March 2020. The largest category, Industrial Supplies, includes the exports from the US fracking industry: petroleum and petroleum products. The ballyhooed exports of foods, fees, and beverages, at $13 billion, accounted for only 9% of total US exports ($142 billion):

  • Industrial Supplies, petroleum, petroleum products: $51 billion, +19%
  • Capital Goods: $42 billion, -1.2%
  • Consumer Goods: $17 billion, +18.1%
  • Foods, Feeds, & Beverages: $13 billion, +21%
  • Automotive Vehicles, etc.: $13 billion, +15%
  • Other Goods: $6 billion, +4.3%.

These are the results of globalization by Corporate America, which has been incentivized for decades to do so. It was touted as a good thing across the board for way too long, as booming US services were supposed to overcome the trade deficit in goods. But that turned out to have been a joke.

Recently, even Fed Chair Jerome Powell blamed globalization for some of the distortions in the US, including in the labor market and the horrendous wealth disparity, instead of acknowledging the Fed’s role in those distortions.

And on top of these structural conditions that have created the long trend of surging trade deficits, there came the tsunami of government stimulus payments, from the infamous stimmies to innumerable other programs, and the shifts in spending from domestic and even local services, such as bars, ballgames, concerts, conferences, cruises, hotel stays, and flights to durable goods and not so durable goods, a large portion of which is imported.

 

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  140 comments for “Imports, Trade Deficit in Goods Explode to Worst Ever, Powered by Stimmies and Decades of Rampant Offshoring

  1. Depth Charge says:

    I see a veritable sea of discounted goods for sale in the not-too-distant future.

    • DawnsEarlyLight says:

      You are not allowed to spell ‘Sea’, if your name is ‘Depth Charge’!

    • cas127 says:

      One small, possible glimmer of hope from a tsunami of imports…when the US finally, definitively hits the wall economically and foreign exporters really don’t want too-debauched dollars (forcing new import prices way up)…there *will* be an ocean of used, previously imported goods in the US, theoretically avl for re-use.

      Not as good as having actual factories, but at least not absolutely nothing.

      • Anthony A. says:

        The flea market industry will come back to life! “Fleacoin” may be issued and sold into a blockchain for traders.

  2. Cmoore says:

    How long can this continue??

    • Depth Charge says:

      For as long as they keep sending checks to people for doing nothing.

      • David Hall says:

        The iPhone is made in China. With Amazon’s release of the Android operating system, there is more competition among phone manufacturers. Android was first released in 2008.

      • Harvey Mushman says:

        No, sooner or later that will not help much. There is no free lunch.

      • Swamp Creature says:

        Right now I am losing money by working. Making $10/hr after expenses being self employed. Hiring help to work on my house to do jobs which I can do myself costs $40/hr or more. If you do the math its time to tell these bloodsuckers to take a hike.

      • Cem says:

        That is only one aspect and a (very) small one at that for this trend.

        Wolf even covered some of those reasons.

        But yes blame poor people, after all, it’s the only scape goat that doesn’t bight back.

        • RightNYer says:

          He’s not blaming poor people. The “stimulus” checks went to married couples making $150,000 a year, hardly “poor.”

          Tons of helicopter money was dropped on people who didn’t need it, didn’t earn it, didn’t deserve it, and thus, we have massive inflationary pressures plus further damage to the moral psyche of America.

        • char says:

          Inflation is what is needed to pay off (more disappear) the covid debt. It is bad but all solutions are bad and this one is the least bad.

        • Wolf Richter says:

          A billionaire doesn’t give one iota about 6% inflation a year – makes no difference to him. But a working stiff will feel the pain. That’s why the wealthy advocate for inflation as solution because they won’t even really notice it.

        • gnokgnoh says:

          I cannot reply to RightNYer, so am replying to Cem. In my company, everyone has taken a 20% salary cut since the start of the pandemic, including the two principals (I am one). At the start of the pandemic, the two principals took no salary for two months, so we could pay people. A number of our staff, while making a decent salary, were able to get stimulus checks, which helped them a lot. One is a single mom with three kids. We are a small consulting company of ten people, and we will make it. Our clients slowly restarted our contracts. Without PPP money and stimulus checks, we would have been dead in the water. Sheesh. The resentment is beyond belief. Stimulus worked.

        • RightNYer says:

          This is a strawman if I ever saw one. We’re not talking about PPP money, which I supported for companies that could demonstrate that they lost revenue. We’re talking about just printing money and giving it to people who didn’t lose $1 in revenue, many of whom were solidly upper middle class.

          And of course I resent it. My money and future earning power was stolen to pay for it.

        • Depth Charge says:

          “Blame poor people?” What in the world are you talking about? Do you understand the English language? Nowhere in my comment did I blame poor people.

        • NBay says:

          Someone once commented here, “Americans love to punch down”. (It’s in my Wolf Street folder.)

          In K-12 that would be known as a “bully”.

          Tell me again about “American Exceptionalism”…….

    • Anthony A. says:

      I don’t know, be WE are all “bought out” as we don’t need anymore TV sets, cell phones, other electric gadgets, etc. As a matter of fact, our Amazon ordering pattern is down to about 25% of what it averaged last year. All we order is dog food, K Cups, and some staples. I price shop those items and if Amazon gets too costly, I buy local.

      Most of our day to day food and other grocery purchases are done locally at small and large shops. It gets me out of the house and I need that time away from my wife who is handicapped and cranky most of the time.

      Maybe over time people will just slow down ordering stuff that originates from overseas. I mean, how many cell phones and TV’s does one need? And once the “stimmies” stop, people will have less disposable income too.

      • Harrold says:

        I think people have indeed obtained all the products they need and will shift spending back from hard goods to services ( ie bars, restaurants, hair salons, sporting events, concerts, etc ).

      • RightNYer says:

        You might want to look into reusable K-cups. I still use the regular ones occasionally, but these ones basically allow you to scoop one serving size of coffee in. I’ll link in the next post but it’ll need to be approved by Wolf.

        • Anthony A. says:

          Thanks for the thought and I think we have one stored away..but dear wife like the blend she gets in the disposable ones. And the disposable one is “biodegradable” and that makes her feel good (silly, I know).

        • NBay says:

          Excuse my ignorance, but what in the hell is a “K cup” ?……and why is it bought in large quantities like dog food?…..I get that completely.

        • Anthony A. says:

          NBay, a “K cup” is coffee pod that is an individual serving made from a Krueig (SP?) coffee maker. You usually buy the pods in boxed quantities of 16, 32, on up..

        • NBay says:

          Thank you Anthony. I drink a fair amount of coffee.

          Reading directly off my jar;
          Signature Select Instant Coffee Crystals…..makes up to 120 cups.

          I’m just in it for the caffeine, think it was on sale for $3.99 at Safeway.

    • cas127 says:

      “How long can this continue??”

      There is a lot of ruin in a country.

      One way of viewing it is that foreign exporters are basically selling US consumers goods in exchange for IOUs (the huge accumulated trade deficit).

      Those IOU’s can be recycled back into the US, mainly into a few typical places,

      1) US export goods…of which there are depressingly few superior to what the foreigners’ already have (see…trade deficit),

      2) US Gvt Treasuries – Hugely the favorite because a) it gives foreign nations huge…but not infinite…influence over DC b) it keeps foreign exchange rates comparatively stable, preserving foreign exporters’ trade advantages, and

      3) US real estate…because the US is rich in land/old capital base if poor in foresight, brains, intergenerational morality, and political class leadership.

      • Franz Beckenbauer says:

        You forgot the most important use for those dollars: buying U.S. politicians so they keep stimmying up your economy to the expense of their people

    • rhodium says:

      Until the dollar crashes and Americans effectively take a pay cut. Don’t forget globalization in the context of corporate rule means a race to the bottom. The only jobs that will pay well (generally speaking) will be ones that most people can’t do.

  3. Depth Charge says:

    By the way, I continue to watch a local Toyota dealer. What I am seeing right now is a build of inventory that was absent only a few short months ago. I expect the last stimulus checks are mostly spent and so that demand is gone. The next stimulus payments to parents start in July, so I think we’re going to see a consumption drop from here. It’s almost May. The numbers in, say, June, might pale in comparison to March. I’m expecting another stimulus check announcement in the summer.

    • Hernando says:

      The stimi still has to get past the senate. This time it will be more difficult I have read.

      • MCH says:

        Hahahah, do you mean after Joe #1 pays off Joe #2?

        Look, we have streets and statues of my buddy Byrd, we will do the same for you. And your little girl, Heather, forgot which pharma she is at now, she retired from aviators/Mylan, right. Tell her to start a new company and we will throw a few billion her way. Do we have a deal?

    • Swamp Creature says:

      Stimulus?? Haven’t got squat

    • timbers says:

      “By the way, I continue to watch a local Toyota dealer. What I am seeing right now is a build of inventory that was absent only a few short months ago.”

      That’s good news! One of my bigger worries is when I might have to buy a new car. Last one I got was prior year’s model during a glut and I really don’t want to pay almost twice what I paid 6 year ago.

      Meanwhile, if you spend a lot on child care ($225 billion) have sick family members and leave your job because of it ($225 billion) have kids and want them in K school ($200 billion) or want to go to community college ($109 billion) or have kids ($3600 tax credit) or need to buy insurance (more hundreds of billions) you can apply to get free stuff.

      I’m single and not a “family” and therefore invisible and unworthy to the folks in DC, no kids, no sick folk to leave my job for, fully educated, and not a “family” so I’m outa luck.

      • Harrold says:

        This is the perfect time to get married!

      • cas127 says:

        “so I’m outa luck”

        Ahem…stop yapping and get back to building TutanBiden’s Welfare State Pyramid…those granite blocks don’t hoist themselves…

    • RightNYer says:

      Truthfully, I don’t think the child tax credits will be large enough to really change people’s behavior.

    • char says:

      Toyota does not have chip problems.

  4. Depth Charge says:

    “Trade deficits are not a sign of a growing economy, or any kind of economic strength, but a sign of rampant offshoring of production by Corporate America of consumer and industrial goods to cheap-labor countries. Trade deficits are a drag on GDP.”

    The billionaire globalists treated Donald Trump like used toilet paper and flushed him and his ideas right down the toilet. Think they don’t control everything? Think again. They were in full control the entire time, hence the “orange man bad” 24/7 on all their media channels. They rid themselves of him and installed a cage around the Capital so they could get back to destroying what’s left of the USA.

    • nick kelly says:

      Say Hi to Q for me.

    • Rudolf says:

      Let’s face it, folks. Corporate America doesn’t give a Fagge about America. They answer to their major stockholders NOT to the citizens. Until the people of the United States realize that they are being conned by both political parties (really one party playing “good cop/bad cop,” nothing will change).

  5. Hernando says:

    Heartbroken- I’m going to go buy a 12 pack of Dos Equis, a bottle of Argentine Malbec, and some French brie.

    How hard is it to become a Chinese citizen?

    • Tom S. says:

      People love local. Local breweries are a hit, every town wants one or 3.

      It’s Walmart that killed manufacturing while the govt sat on their hands in the name of free markets or whatever. Small towns and big cities both took it on the chin. You might not have a job but at least you can get an angle grinder for $15.

      Somehow “unemployment” got in the 3% range pre pandemic? Seems like most of the ex-manufacturing people just dropped off the list or are working part time.

      • Depth Charge says:

        “You might not have a job but at least you can get an angle grinder for $15.”

        Which will only last for a few uses then end up in the landfill. It’s actually more expensive in the long run than the Milwaukee which is $100, but also MADE IN CHINA though with better engineering and production standards.

        • rick m says:

          Milwaukee Electric Tool Corporation built their product to US Navy standards from the Thirties through WWII. Started downhill in 75, Amstar bought them. I own seventeen pre-amstar Milwaukee tools. A Hong Kong company owns the name today, anyway. The American company that built my tube preamplifier in 1961 suffered the same fate.

        • MiTurn says:

          I am increasingly finding it difficult to find any tools, even hardware, made in the US. Recently I bought some wire clips to secure mesh-fabric fencing to some metal posts (t-posts). The clips were ‘proudly made in the the USA’ and, if you can believe it, ‘metal melted in the USA.’ In other words, made from metal imported from somewhere else. But proudly melted in the US. American flag and all.

          Sheesh!

        • NBay says:

          MiTurn-
          That is bad…reduced to a marketing ploy.

          Hand tools do go through quality cycles, though, even those $15 Harbor Freight grinders were pretty good at first, I cut a lot of Korten steel with mine on my containers project, (which was heavy bearing, motor, heat load), before my back went out bad, but then I guess they went cheap build for same price and more profit. Black and Decker was a classic example. Makita also did it. Electronic tools I’m not sure about, but have a Fluke 21 MM from the 80’s that still works fine. Dropped a LOT.
          Best thing to do is go to a few construction sites or fabrication shops and see what they are using, if you are going to use the tool a lot.

      • Depth Charge says:

        You know those 300,000+ homeless in CA alone? None of them count as “unemployed.” See a problem? I do.

        • Petunia says:

          The states are also lowering their unemployment number, so they don’t have to pay federal extended benefits, after this round of payments end in September.

        • Ted says:

          Dump em in the see!

      • Edwatd says:

        “angle grinder for $15” just bought one, a little more than $15 but made me smile.

        • NBay says:

          Harbor Freight had their best model on sale for $13 when I got mine for containers project, so I bought two and ran a cutoff and grinding disc. Very handy.

    • MCH says:

      Hernando,

      That’s an easy one: come up with the right answer to 67 / 14 to the third decimal place in five seconds without a calculator and you’re in.

      ?

    • cas127 says:

      “How hard is it to become a Chinese citizen?”

      Don’t worry, China will come to us.

      Who do think the landlords are going to be?

  6. Gerry says:

    The Apple iPhone 12 Max costs about $1,100. How much better is this smartphone versus a Pixel 3a for $300 or a Moto phone for even less? Apple shares are sky high because of its profits from iPhones made overseas. Offshoring manufacturing has been very profitable. Amazon and Walmart have no problem selling consumer goods from China that are predatory priced.

  7. fred flintstone says:

    Docter Docter….. emergency……your patient is dying.

    I’am on the golf course……give him a couple aspirin, an injection of sugar and salt and let that new guy tell the family. By the way……is the insurance company still good for the bills.

  8. Roger Barris says:

    Actually, it’s powered by decades of insufficient savings (including the huge government deficits). Any economist will tell you that net exports equal savings minus investment – this is an accounting identity and cannot be disputed. See the section entitled “Simple Accounting Helps Explain the Trade Deficit” in this article.

    https://www.stlouisfed.org/publications/regional-economist/third-quarter-2018/understanding-roots-trade-deficit#:~:text=Therefore%2C%20a%20nation%20runs%20a,savings)%20to%20finance%20national%20investment.

  9. Mike T says:

    Wolf I’m curious to know if the volume of goods increased by the same percentage terms. That is to say have import prices gone up and will that show up here as imported inflation.

    • Wolf Richter says:

      Everything is in dollars, the stimulus is in dollars, the spending is in dollars, and the imports are in dollars. It doesn’t matter what you physically get for it.

  10. Micheal Engel says:

    1) US Goods Trade deficit best cure is tariff on China.
    2) Tonight feint bang the FANG.
    3) IWM trend was up until It took a break, 3M ago. Every high was beaten by a new higher high. Every new low was a higher low.
    4) Sept/ Oct 2020 : that was not the case for NDX, SPX and the DOW. Thjey made a lower high, while IWM moved higher.
    5) IWM : QQQ weekly turned lower for 3M, bounced higher above a red flatbed cloud, beating it with a Hammer & long nail.
    6) Tax the rich and stimulate small businesses.
    7) Capital Gains on dormant RE sellers, who owned a house for 30Y – 50Y, is income. Those who promote the bubble will share the prize.
    8) Mar/ Apr 2021 housing report will shakeout the last weak holders.
    9) Baby industries, protected by China wall, can flourish with an open gates in our southern border. The illegal brigade will will cure inflation.
    10) Genghis Khan police will soon replace Portland bolice, because they are fit physically, smarter and know how to fight in the cage.

  11. Swamp Creature says:

    J Powel is scheduled to speak today. I’m on the edge of my seat in anticipation.

    • Depth Charge says:

      Did you see it? He was lying through his teeth. His nose passed over the audience and was out of the building.

  12. Tim says:

    What is the average of the monthly imports over the past 12 months? Visually it looks like it might actually be less than in 2019.

    Also, we can buy more goods made in the U.S. but they will be more expensive. Now, we’d all be better off if we weren’t buying so much “stuff” but that is a cultural thing that has nothing to do with economic policy.

    Blaming the stimmies may be a little misguided. I have also read that much of the money is going into savings and on this very blog, I’ve read that credit card balances have been declining, which is a good thing.

    • Wolf Richter says:

      Imports, six month totals:
      Sep 2019 to March 2020: $467 billion
      Sep 2020 to March 2021: $596 billion (+27% yoy)

      • historicus says:

        and so then what countries are the winners in the stimulus game?
        It looks like a giant “pass through” to China

  13. MCH says:

    So, in other words, same ol’ same ol’.

    Well, we could go with the usual litany of things that bemoan the same old crap, but that would be redundant. Instead a couple of simple missives will do:

    #1: XJP to the J team: thanks guys, really love you, keep buying more stuff, don’t worry, it will be cheaper than ever while we automate, you guys just keep talking about the important things like systematic R*****, unionization, why there is no right answers, and how service jobs are the best, you know the things that matter. And we are happy to help you with infrastructure, you know you need more steel, more computers from Apple and Dell, and those kinds of things, we can supply it, want EVs, we have dozens and dozens of companies that can do cheaper and better. All wrapped up in a bow, Green New Infrastructure. Oh one request, go a little lighter on the rhetoric, if you do too much, it will make Nike, Dell, Apple, Disney, etc look bad, you don’t want that. Right?

    #2: in my best Gary Coleman/Jerome Powell voice: “whatcha talking about, Wolf, the Fed and the Federal government isn’t distorting anything, doing our best to maintain an balanced economy and fighting inequality.

    ?

  14. Dom says:

    Free trade policies have not met ANY of the goals promised, except increased corporate profits.

    Its always been about labor arbitrage, sell here make elsewhere, and was never going to help American jobs. Corporate cheerleaders pushed it through congress despite warnings from labor (labor was mostly right).

    Bad deals NEVER last….

  15. Micheal Engel says:

    We might be back to the future #2 : the 60’s the 70’s and the 80’s ==>
    1860’s, 1870’s…1890’s, building industries, R/R and infrastructure fighting the militant unions with new immigrants, protected by tariffs, and osc between one depression to the next, deflating debt.

  16. Judith Stapleton says:

    These numbers are the tea leaves!
    As long as they were buying our junk while we were buying theirs, the addictions were manageable while the oceans turned into the great favela.
    There is no US economic recovery. Service industries require people spenders to serve. And the western world doesn’t want to wait on Chinese patrons.
    Corrupted capitalism shot itself in both feet.

  17. The monetary base expanded by nearly half a trillion in March. Biggest jump since the first months of the pandemic and put the curve into parabolic mode. Have to think those dollars we are paying for imports are losing value fast. Inflation is heating up in the EM, and that brings the inverse, deflation. Not much talk about inflation at FOMC today, not really. Yields creeping up, even while the Treasury is holding back new issues. The inflation chimera is disappearing. The market punished Tesla for not meeting production goals, while they made more money than expected.

  18. Edward says:

    Adam Smith was not so much an economist as a moral philosopher. The problems we face are moral. Get the morals right and everything else falls into place. Time & time again. Daren’t say that out loud but it’s true.

    • Dan Romig says:

      I agree Edward.

      As an audiophile it makes me sad to see so much gear designed in the USA, and in the UK from legacy marque names, that’s “Assembled in China.”

      There are still quite a few Hi-Fi makers that keep everything “Made in USA.”

      I suppose it comes down to question of the bottom line for companies to decide where to manufacture their gear. Morals versus profit?

      • char says:

        The parts are in China. You can’t really assemble that stuff here as you can’t get the parts

        • Dan Romig says:

          char,

          A high quality manufacturer in Valencia, CA that I have gear from for my main system has this to say:

          “We design and produce our stuff here in the USA, with the vast majority of parts cost going to US-based companies manufacturing in the US. We need all the clarification in there because some people have played games with what “Assembled in USA” means. When we say it, it means our chassis guys are right over the hill in San Fernando Valley, our transformers are made here in California, our boards come from the east coast (of the USA), and we design, assemble and test everything here in Valencia, California.”

          Unfortunately, they have a ‘Rolling BackOrder’ of a few weeks on a lot of their equipment. I’m guessing that their supply chain is disrupted – even from USA suppliers.

          New York’s McIntosh was founded in 1949, and they are still going strong in Binghamton to this day. It is, and can be done.

        • NBay says:

          Brother’s Ex came from Binghamton, so I spent a lot of time there. Fun Balloon Festival ’07 or so, with sand VB courts. (I played for 30 years). Unfortunately it’s a poster child for tech factory outsourcing, with the expected results. Bought a quality compass years ago that said “Binghamton”, but don’t know where it was made then or now,

          But was wondering where the tubes for analog home music come from now. I think there may be some makers here, being a niche market and all, and I know musicians who use amps with the heavy transformers, so that’s another bunch who use them.

        • Dan Romig says:

          NBay,

          As far as I know, audio vacuum tubes are no longer made in the USA.
          Shuguang = China
          Tung-Sol = Russia (these are thought to be a good quality tube)
          J J = Slovakia
          Genalex and Mullard brands= Great Britain

          The California company I mentioned has some pre-amps and headphone amps that use tubes. McIntosh has quite an array of products using tubes.

          Minnesota’s Audio Research, which has been in business for 51 years, uses tubes in most of their pre-amps and amps.

        • NBay says:

          Interesting, thanks.
          I started the electronic part of my “career” learning tubes, and that is some really tricky metalwork and design going on inside them, (screen grids and whatnot), to get fidelity.

      • rick m says:

        It makes my heart heavy to see “made in China” on the back of a Harmon kardon anything, even if not hifi,I’m grateful for Magnapan and Klipsch, Puffin Audio and Decware (saving my money up) and all the others who make the considerable commitment to their customers to keep their business stateside, and even more the audio community that lets you take on DIY with expert guidance, everything I own needs recapping. It’s the only way I could afford to own only vintage American and Japanese gear. I hope these companies stay and grow here, and through success breed competition, this country was that way a few generations ago, hope it circles back

    • RightNYer says:

      Edward, I’ve been saying that for over a decade now. All of our economic, financial, crime, social cohesion, and other problems are not the cause of our moral rot. They’re the symptoms.

      • NBay says:

        I can’t think of any better relevant moral line to your post than the old, “Idle hands are the Devil’s playground”.

        But the decisions causing that occurred in American Company and Corporate offices/boardrooms, and NOWHERE else…….and the “Golden Rule” sure wasn’t considered at all, resulting in more much more planetary “rot” than just idle hands.

        PS; I’m total agnostic for 60+ years now:

        How in hell could I or anyone else know what the Universe “wants” people to do? Or do some people just like believing they still have parents looking out for them?

        I’d call it more a problem of realizing that we are on our own on a ball in space and had better behave accordingly.

  19. nick kelly says:

    Powell has just said signs of inflation are ‘transitory’. In the same 24 hours Goldman has said: ‘commodities will rise 13.5 % in the next 6 months with oil hitting 80$ and copper 11000 a ton.’ (That will have the wire and pipe thieves in action)

    Even if Goldman is half right, inflation is not transitory. Also the chip shortage is not going to be resolved this year. For one thing it has apparently become a self- sustaining vicious circle: the shortage of chips is slowing the construction of new chip plants.

    It looks like a sea- change in psychology: if the supplier of anything thinks his inputs will be more expensive next month, he has to build that into the price of his products. If Goldman is right, especially about oil, which is a component of everything, the consumer is going to be under the gun.

    • char says:

      They expect/hope* that you get a year or two of 10% inflation and than it is back to normal inflation. Not that the price rises will be reversed. Also not everything will inflate, see for example malls.

      * Hope against knowing better. Getting inflation under control will be hard, but it is better than the no inflation in wages we have had

    • historicus says:

      nick…

      Yep, the inflation in grains, industrial metals, etc….might stop…
      but look where it will leave us? These items have nearly doubled in just 5 months….and if they stop going up you can bet the Fed will say “See! it was transitory.” So we are to get used to the new prices of lumber and food I guess and nothing really happened. Next question….J powelll, what is your favorite ice cream?

  20. gorbachev says:

    America does not want to make most of its own
    products. Far more profitable to be a middle man.
    No unions, no R &D can switch it up if need be, and
    low-end benefits if you have to provide them.
    If America wanted to manufacture again they could
    because the capacity and skills are still there.

    • Felix_47 says:

      I work with a number of companies and over the last few decades all of them have thrown in the towel with US workers. The problem is US workers want benefits, good pay, worker’s comp, time off, do drugs. show up late, leave early. Terminate someone for cause and you are looking at years of worker’s comp litigation. The average employer in my area has moved to full Latino/Haitian workers legal or illegal does not matter. Black workers are especially out of luck because so many are super entitled. Employers will take an illegal Haitian over a domestic white or Black every time so it is not skin color. The problem is simply awful. One solution would be to force trading nations in all trade agreements to facilitate international Unions so wages in producing nations start to approach US wages. Tariffs during a transition period might make sense. Either allow the UAW or the ILGWU to unionize your plants in Mexico to US rates or store the cars you make or clothing you sew until you give in. Same with China. Another partial solution would be to provide a guaranteed federal child support to single mothers so they can work on raising their children properly rather than holding down a fast food job since child support paid in the US is essentially economically meaningless in the majority of cases. I don’t see more college or free college as a solution for the vast majority of jobs I deal with. These jobs require only that the worker show up on time and do what needs to be done while avoiding sabotage, drugs and injury. Most jobs, even in Washington, require minimal higher educational skills as our current and last Presidents ably exhibited.

      • RightNYer says:

        I used to think this way, until I realized that the workers appear “entitled” because capital has taken a larger and larger piece of the pie over the past 40 years. They see the bean counters living the good life while those who actually do the work can barely afford a house or health insurance premiums.

        Is that “entitled?”

  21. Brant Lee says:

    It’s like: IN YOUR FACE American peon, from our banks, corporations, and government. How can anyone in a leadership position just keep grinding down living and working standards in their own country?

    I was in a Walmart this morning, it’s almost a laugh how hard they try NOT to shelf U.S.-made. It’s all overpriced cheap-made junk. Lipstick on a pig. Heck, the Chinese themselves couldn’t do a better job of ruining manufacturing and labor here than Walmart. Now, we’re all paying for exploding overseas shipment cost, the latest insult.

    I’ve got Walmart down to only a few items needed there per month. I even pay a little more for gas at my local town store. Looks like we all need to learn to do without anyway, our new economy for the 90%.

    • Swamp Creature says:

      I never shop at Walmart just for the reasons you sited above. They are on my boycott list.

    • Petunia says:

      The list of companies I won’t support is getting longer everyday. Walmart, Coke, network tv, news papers, magazines, facebook, ….

      • Depth Charge says:

        Google, Twitter, Nike, NBA, NFL, MLB, Ben & Jerry’s, Monsanto (Bayer)…

      • Swamp Creature says:

        My boycott list is getting so long I can’t even find anywhere to spend the windfall I’m making as a result of this pandemic. Just went to my favorite bird shop and spent $70 on bird food. I may just go to the bank tomorrow and exchange all my spare dollars for Swiss Francs.

      • MCH says:

        But you still like Disney, right?

  22. Fat Chewer. says:

    I’m thinking about setting up my own shearing shed. Just doing my part for my country. Line up folks. Shearing as a service could be the key to my nation’s economic future. I estimate the market for haircuts is potentially in the trillions.

  23. GBC1 says:

    I wonder what the mark up will be on the sale at retail of the $65 billion of imported consumer goods. I wonder what the cost of those goods would be if they were produced in America? I wonder, would the greater benefit come if the production of those goods was brought back to the US, or from continuing to procure them at low cost from foreign producers?

    • GBC1 says:

      This from the internet:

      “The retail sector continues to grow. Total retail sales (including motor vehicle and parts sealers) from 1 million retail establishments in the United States surpassed $5 trillion in 2017. The U.S. retail industry directly employs about 29 million people and supports more than 42 million jobs.”

      This data is a few years old of course, and the pandemic will have affected the numbers, but the general question I want to raise is whether the volume of US imports of consumer goods and vehicles is out of line given the size of the US market for these goods. I suppose theoretically it could be better if more of the imported goods were produced in America, but clearly the cost would be higher (or they would be produced domestically now), so how do you optimize this? Perhaps it is at the optimum now, perhaps the invisible hand steers to the optimum. Perhaps there is nothing wrong here.

      • Brant Lee says:

        Everyone thinks this. Most items on shelves of the huge retailers have mark-ups in the triple digits. If the U.S. would impose a 50% mark-up ceiling on imported goods, prices would fall like rocks. Better products CAN be made in the U.S. and sold for the same prices (or lower) being charged now. It’s a scam and crime what is going on now.

  24. John says:

    Wolf,
    Thanks, we are blessed with all the resources we need right here. Industrials, oil and gas is our national security, and with all this printing of money by the fed, at least we have our resources. Big government at its best picking winners and losers, destroying and creating too. There is a word for that, I forget what it is, but it’s the only way to thrive now. I believe we have gone to the fifth dimension in all of this. The United States of America still the greatest country on earth.

    • GBC1 says:

      The US is the world’s greatest consumer goods market. This is as a result of the affluence and size of the market, and also because of few restrictions on imports, low duties and sales taxes, efficient distribution systems and fierce competition. This has raised the standard of living for all Americans. It brings people to America to shop. For many Canadians, the major shop of the year is a trip across the border to the US. Canada has higher import duties on goods imported from outside the North American free trade zone, much higher sales taxes, lower gdp per capita and higher tax rates so less disposable income, and weaker retail. Plus less luxury spending, on cars, boats and aircraft for example, and on many other things. Whether this is good or bad in the big picture I will leave to others to divine, but the US market for consumer goods underpins the US economy and the foreign sourcing of low cost goods is a very important part of it.

      • RightNYer says:

        Yeah, except the U.S. market CAN’T afford it. We have to borrow/print money so that the consumers can do all of this shopping.

  25. mutang says:

    Powell claimed today that there is no housing bubble. How can he say that with a straight face?

    Yes supply is miniscule and leverage isnt as wreckless as it was pre-2008, but what does he think housing prices would be if interest rates were even remotely close to normal (say 300 bps higher than they are today)?

    More income diverted towards interest payments, means less income available to service principal payments, means lower principal balances, means less demand and higher prices. And this is in a world where 40-45% is the new 33% i terms of Debt-to-Income ratios. Finance 101. Rising rates eventually means falling asset prices.

    • Heinz says:

      Powell is a past master at the Big Lie technique, whether intentionally or unwittingly.

      Big Lie (or große Lüge) is a propaganda trick whereby a gross distortion or misrepresentation of the facts is used by a politician or official body to further their own ends or narrative.

      And its corollary, if you will, is that a big lie told often enough eventually gets accepted as truth by masses.

      Also, to work this technique must be accomplished by the liar never admitting fault or wrong, and never accepting any blame.

  26. Swamp Creature says:

    J Powel said that he will let inflation run over 2% for a considerable period of time, and pump 120 billion fake money out there with no end in sight. The fact that wages are not keeping up was of no concern to him. In fact he believes that is a good thing. Neither was the fact that peoples savings are being eroded by inflation. When asked about the 10 million out of work due to the pandemic, his response was they need to learn new job skills.

    This clown is without a doubt the dumbest and most dangerous man to ever occupy this post. There is no opposition from anyone, and he able to peddle this bulls$it without letup.

    • Tom S. says:

      It is remarkable how closely the other Fed governors walk in lockstep with Jpow. “Low rates are helping the job market” is the mantra, and yet I’m pretty sure research shows that there no long term causation between interest rates and unemployment. Can we get one straight answer on why we need to keep the QE going for decades?

      • Fat Chewer. says:

        Because America has lost most of the markets it gained after WW2. It’s actually really quite simple. The hard part is accepting that is the truth.

      • historicus says:

        Tom..
        ” “Low rates are helping the job market””
        They keep saying that…as the federal govt pays people to stay home and job openings are all over the place.
        Also, what employer stops hiring because interest rates went from 0% to 2%?
        The Fed is a PR department for the stock market. It is a big game with big winners. The inflation they promote will be crushing and grinding on the working families of this nation, as those with stocks sit with their feet up and wonder each morning, “Honey, how much will we make today?”

      • Swamp Creature says:

        The stock market did very well in Weimer Germany. Investors used foreign bank accounts to buy domestic stocks to hide their identity. While savers and workers especially those who were not in a union got wiped out the insiders got very wealthy investing in stocks.

    • historicus says:

      The Fed is INSTRUCTED TO FIGHT INFLATION (stable prices mandate) yet everyone sits around and nods when they PROMOTE INFLATION. I just dont get it. Is the entire thing that crooked?

  27. MFG says:

    This is indirectly why a 5th deceased Gray Whale has washed up on San Francisco Bay shores in less than a month.

    “A necropsy of a whale found at Muir Beach revealed significant bruising and hemorrhaging to muscle around the whale’s jaw and neck vertebrae consistent with blunt force trauma due to ship strike.”

    https://ktla.com/news/california/5th-whale-washes-up-dead-in-san-francisco-bay-in-less-than-a-month/

  28. Max Power says:

    Helps explain AAPL’s blowout quarter.

    • MonkeyBusiness says:

      The big companies are doing really well. Google blowout, Facebook blowout, and now Apple blowout.

    • RightNYer says:

      Of course they are. How can you not “blowout” when the government not only destroys your competitors, but hands thousands of free money to your customers?

  29. Auldyin says:

    None of my business but you might like to know it was a ‘cronic’ balance trade deficit that earned UK the glorious title of ‘sick man of Europe’ in the 70’s. Although we did have and still have a strong services sector. We ended up in the EU for forty odd years because it was the only ‘solution?’ our Bozos could come up with. I hope that disaster doesn’t happen to you. You could always try your hand with ASEAN of course.
    No wonder your tough guys are going round the world levering everyone to buy your LPG. Nordstream 2 the Germans aren’t buying.
    Don’t want to rub salt in your wounds but if Powell ups rates to 4%- fracking industry bye-bye. But huge flows of cash into the $.
    Just sayin’

  30. MonkeyBusiness says:

    Best recession depression ever!!!

  31. MiTurn says:

    “Recently, even Fed Chair Jerome Powell blamed globalization for some of the distortions in the US, including in the labor market and the horrendous wealth disparity, instead of acknowledging the Fed’s role in those distortions.”

    I vote Wolf for any office he’ll run for. He’s the only one telling the truth, economic-wise.

  32. rick m says:

    A significant portion of those inbound consumer goods get returned for credit, but value is lost, it’s not a wash. A lot of returns and recalled items end up in Africa. Inflation is routine there and Zimbabwe is only the most outrageous example. Even bribery has gotten very expensive for narco-terrorists. East Africa has lost harvests to locust infestation, and couldn’t spray pesticides because of the local fundamentalist thugs. They face starvation on top of a pandemic. A stable and productive state is hard to find across the continent. The Chinese are loan-sharking the impoverished regimes who can’t make the vig and lose their collateral. The US always just forgave those kind of loans. We are so fortunate in comparison it’s difficult to credit barring divine intervention. I’m glad I grew up when God wasn’t a bad word.

  33. Neil says:

    Is military hardware included in the “Industrial” sector ?
    Curious if the weapons of war are included in GDP figures.

    • Auldyin says:

      N
      Everything that anybody in USA spends money on is included in Gdp except buying imports because that spending goes into the foreign country’s Gdp.
      What will really interest you is that all govt spending is credited at cost in Gdp. So, if a clerk gets paid $40k a year to sit and look out the window all day, that’s $40k worth of gdp. If a 100 guys build a 100 cars in the private sector that goes into Gdp as 100 cars @ $30k each. Govt output does not have a measurable market price so they put it in at cost which I think is the biggest ‘scam’ of the lot. Gdp is a magic number.

  34. Micheal Engel says:

    1) AAPL, FB and GOOGL are doing great, but USTEC Futures are red.
    2) Walmart grocery and auto service centers produce the
    largest volume. There is little China in these categories.
    3) The rest get busy during special occasions like xmas, the pandemic, back to school…. Otherwise they are slow.
    4) During the xmas season, the memo guys fill the stores. They reduce risk by lifting their markup. They keep China, Vietnam…busy.
    5) In Jan most of their stuff disappear from walmart.

    • ru82 says:

      FB and Goog is almost all from advertising.

      I keep wondering how many countries will finally wise up and realize so much advertising money is leaving their country and going to FB and Google.

      I suspect that they will make FB and Google start making them pay for content?

      Just think how much more advertising money FB and Google would have if China had not banned them. China’s ban has allowed China to create some really big organic social media companies.

      I wonder if Europe will do something? It would allow them to create competing companies that could be controlled by their own Government laws.

      • Auldyin says:

        Spot on ru
        They are getting hammered with investigations in EU, Aus, etc.
        US appears to be the only place giving them a pass.
        Wonder why?

  35. Gian says:

    Looks like China and every other opportunistic country is once again “eating our lunch”.

  36. DR DOOM says:

    Keep the money printer going Brrrrrrrrrrrr……… “Experts” said that when the trade deficit was 10B we were doomed. The Fed kept prinnting. 10 , 20,40, 70 and now 90B and the productive schmucks of the world are still sending me shit for the printed fed butt wipe. I say hand out bigger stemmie checks and when we hit 150B we will be booooooooming….. and keep printing the fed butt wipe till the world blinks. When you find a sucker double down, don’t go wobbly.

    • Auldyin says:

      Way to go DD
      If Powell puts rates up you’ll be up to your neck in everybody else’s money (maybe except China’s or Russia’s this time).
      It’s a funny old world when you own the reserve currency.
      We used to have that privilege many years ago.

  37. Maximus Minimus says:

    What’s the reason for a relentless decline in dollar; deficit, another trillion dollars of money for nothin, or this Wolf Street report?

  38. Franz Beckenbauer says:

    Fracking ? These are the main exports of the U.S. ?

    The fracking Joe wants to ban ?

    That fracking ?

  39. historicus says:

    The Greatest academic lie..
    “Trade Deficits Don’t Matter”…
    and the reason they give is that the dollars must eventually return.
    Well, they forget that with the return comes a change in ownership and control.
    We buy items that end up in the dumpster within years…
    The trade surplus countries buy hard assets with long lives. They are left owning and controlling that which they did not previously. Who won?
    And the obvious revelation is that countries with surplus are on the ascent, and those with massive deficits must print their way to prosperity. ($20 Trillion in 12 years)

    • Auldyin says:

      Spot on H
      But you get to keep the title “Great” in the history books and all your castles and grand buildings are still there to be looked at even if they are owned by a Taiwanese pension fund.
      Been there, done that.
      Chill have a Bud’

  40. Swamp Creature says:

    With a major drought forecast for the the next 2 years in the SW USA and the cornering of water rights in California by hedge funds, look for food prices to skyrocket. We may even have to import food from China before it is all over. I’ve checked the source of most of the vegetables in the supermarket lately and noticed most of it coming from abroad, especially Latin America. Prices are up 10% across the board. I don’t know how a large family can afford to feed themselves anymore.

    • Heinz says:

      Fiat Meister Powell and his Fed will simply print up more food… oh, wait.

      Seriously though, it is a relentless rise in food prices alone that can cause a great deal of social unrest (remember Arab Spring not so long ago?).

      Sticker shock at grocery stores looks like it will be persistent through 2021 and beyond.

      For meat lovers it will be a difficult time for their love affair with animal protein, what with cattle feed costs increasing because of steep rise in input costs of corn and soy.

      Perhaps the elites plan to wean us off animal protein will get some traction through inflation alone …

      • Swamp Creature says:

        Wasn’t it the failure of the Wheat crop in 1917 that led to the overthrow of the Czar and the Bolshovich revolution?

    • You would be amazed at the food bank system. The agriculture system produces far more food than is needed. Distributors recycle items near expiration date, food packaging and handling has also extended the shelf life. There was a comment in the speech last PM about people in “nice” cars lined up at these food banks. The global supply chains have been remarkably resilient, and even in cases of price spikes in items like lumber, there is product out there. What I notice is that high end groceries drop their prices, run specials, and they have better quality, while low end markets run the same prices and have lower quality. Much like the housing market, which is overbuilt at the high end, (McMansions), so that prices converge and maybe you will be able to buy 5000sq ft at the same cost as half that number? Bigger houses more upkeep, higher taxes. This is the game show economy. You can’t play the game if you cannot afford the sales tax on the prizes. The US food system has changed radically, and the midwest no longer grows the food we eat. Gluten free and meatless products. Their GMO ag products go to China, and Americans eat foods grown locally. Pricing power and product selection now resides with consumers, if consumers do not want or cannot afford the product then the supplier has a problem.

      • Swamp Creature says:

        What has extended the shelf life is all the chemicals and preservatives that they inject into the food they sell. Read the lables. You need a magnifying glass to read all the crap they put in the food today. That only includes what they are required to disclose. All the cereals and breads are full of preservatives. Bought some mash potatoes from the hot bar and when I got to the checkout line I noticed two dozen chemicals added to the potatoes. I told them to take them back. I wasn’t interested.

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