Anyone scratching their head how it is possible that in an environment of a soaring dollar the US trade balance just tumbled, and printed its smallest monthly deficit since 2009, here is the answer: in January, U.S. imports (with the delta entirely in the goods, not services, column) plunged from $232 billion to $222 billion, a whopping $10.2 billion or 4.4% drop, and the biggest monthly decline in U.S. imports since the peak of the financial crisis in the aftermath of the Lehman collapse.
The irony: since exports also dropped but did not plunge quite as rapidly, this disturbing number will actually be a boost to US Q1 GDP, which as reported recently, is now tracking at 0.0% with the Atlanta Fed.
And now time for a question: with U.S. and Chinese imports both plunging, just who is Europe "exporting" all of those surplus goods and services to?
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