Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Despite the slight pullback in imports and modest narrowing in the overall U.S. international trade deficit, businesses continued to take in goods and supplies ahead of tariff threats. The historically wide deficit is set to blow a hole in first quarter GDP growth.
Off the Charts
Administration officials have warned the transition they are attempting to implement will come with some growing pains, and today’s incoming data looks set to blow a hole in first quarter growth. The U.S. international trade deficit narrowed in February, but only to $122.7 billion, which leaves the deficit historically wide (chart). And this is almost entirely due to a pull-forward in demand as businesses front-run tariffs.
Imports were a touch softer with a change of less than a tenth of a percentage point (0.0%), meaning that businesses continued to take on goods and supplies at a high rate consistent with what we saw in the advance trade report last week.