Yesterday, the US Department of Commerce announced the US trade deficit — the difference between exports and imports — jumped a “surprising” 4.8% to $42.3 billion in May. Fittingly on this Bastille Day, the US consumer has stormed back onto the scene to resume consumption that outpaces production.
I’m not sure why so many Wall Street analysts and economists were caught off guard. It’s like letting a dog off its leash and feeling bewildered when it runs away to smell the world. Behavioral conditioning is not something that changes in a few months.
Now that we see glimpses of how our culture will resume once the leash is removed, maybe we can stop pretending that our entire society has somehow been endowed with the frugality of those who lived through the real Great Depression.
Looking deeper into the trade data, there are some heartening signs. US exports grew 2.4% to $152.3 billion — the highest since November 2008. I like seeing these more aggressive moves to capitalize on global consumers.
Our biggest addiction is still cheap Chinese goods. Our deficit against China (NYSE: FXI) — our 3rd largest trading partner — rose 15.5% to $22.3 billion from $19.3 billion in April. TJMaxx (NYSE: TJX) and The Dollar Tree (Nasdaq: DLTR) have done well selling such wares. Moreover, discount electronics retailers such as Systemex (NYSE: SYX) contribute to the imbalance in technological products.
This recession has reminded me you can’t teach an old dog new tricks. America’s Got Talent, alright … to consume!