The surge in the monthly trade deficit to a massive $51.4bn in March, from $35.9bn, means that the US economy undoubtedly contracted slightly in the first quarter. Nevertheless, the massive 7.7% m/m spike in imports is mainly because, following the resolution of the labour dispute in Feb, the West Coast ports began to work through their backlogs in Mar.
Assuming that most of the catch-up is now complete (the 7.7% rebound in March largely offset a cumulative 8% decline over the preceding two months) then imports should fall back in April, bringing the trade deficit down to a more normal level too.
The March trade data will require a downward revision to first-quarter GDP. The second estimate will show a decline rather than a 0.2% annualised increase, but it will be a pretty modest contraction of roughly 0.3%.
"The 20.0% m/m surge in consumer goods imports and the 10.2% m/m rebound in autos imports in March is not all down to the weaker dollar (currency shifts simply don't feed through into trade that quickly). It means that US retailers anticipate a big pick-up in domestic consumption growth in the second quarter. Accordingly, we still think that second-quarter GDP growth will be above 3% annualised." said Capital Economics
