- Trade deficit (Feb): widening slightly after falling to its lowest level in over 5 years
- Import prices (Mar): set to rise for the first time since July 2008 due to higher oil prices
Consumer credit could have fallen by a mere $1bn in February, as the decline in retail sales was not as steep as expected.
From September to January, wholesale inventories decreased for five consecutive months, by a total of 4.1%. However, wholesale sales dropped by a whopping 18% in the same period. This, and the ongoing decline in the ISM inventories component, indicate that the inventory correction is far from over, and we forecast that wholesale inventories will have gone down by 0.8% mom in February.
The nominal trade deficit narrowed by $3.9bn to $36.0bn in January, the lowest it had been since October 2002. However, in real terms, the deficit increased markedly from $42.9bn to $44.0bn, as exports continued to fall more sharply than imports due to the global recession and a relatively strong dollar. Given that import prices only declined slightly in February, the nominal trade deficit could have gone up to about $36.5bn.
After seven significant declines, import prices could have risen by 1.5% mom in March, due to oil prices having increased by about 10% mom in the statistically relevant period. However, in March 2008, import prices went up much more sharply, and thus the annual rate could drop to -14.1% mom this March. Import prices less petroleum are likely to have continued their downward trend which started last August.
We expect initial jobless claims to have remained unchanged at 669k in the week ending 4 April. The 4-week moving average has been rising for 11 weeks in a row and has reached 657k, the highest level in 27 years.
The March budget deficit is expected to amount to roughly $150bn, more than three times as much as in the previous year. The budget deficit would then have reached about $910bn in the first half of this fiscal year, and could rise to almost $2,000bn for the total fiscal year.
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