The narrower the US trade gap, the smaller the drag on the GDP calculation. Unfortunately, there is a pretty strong correlation with the size of the trade deficit and the direction of GDP. When the Us economy is strong, we suck in cheap imports. When they economy is weak, we import less. A classic good news/bad news scenario.
Combined with the slump in consumer credit we saw last night and the payrolls and ISM last week, it looks as though Q3 is off to a fairly squishy start…
