The trade deficit hit $105.6 billion in August. Economists polled by Dow Jones expected $102 billion. So we missed the acceptable level of catastrophic imbalance by $3.6 billion and now everyone gets to pretend this matters.
That's a 13.7% jump from July. Month over month. Not year over year. July to August. The country imported $3.6 billion more stuff than the experts said was reasonable to import beyond what we export, and this is somehow a data point worth your attention.
The headline notes this is the widest deficit since just before Trump tariffs were enacted last year. Which means the tariffs worked for a while, or didn't work at all, or worked in reverse, depending on which cable news network your Uber driver had on this morning. The technical analysis here is bulletproof: Americans bought foreign products, foreigners bought fewer American products, and the gap between those two numbers was larger than it was thirty days ago.
Retail traders will now adjust their portfolios based on this information. They will sell stocks that benefit from imports. Or buy stocks that benefit from imports. Or sell stocks that suffer from exports. Or buy stocks that suffer from exports. The strategy doesn't matter because the trade deficit number will be completely different next month and none of this will have predicted any of it.
Some currency trader in Singapore is watching this number tick across his screen right now and thinking it confirms his thesis. His thesis is wrong. It was wrong yesterday. It will be wrong tomorrow. But today, for about ninety seconds, the trade deficit number makes him feel like he understands something.
The Dow Jones consensus was $102 billion and reality delivered $105.6 billion, which means forty-seven economists spent weeks building models and still missed by the GDP of Luxembourg.
Photo by Markus Winkler on Unsplash
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