Thrift is making a comeback in the US and Europe as inflation roars and the economy rolls over, plus a stunning new record.
U.S. TRADE DEFICIT SETS ANOTHER RECORD
May 10 (King World News) – Gerald Celente: The U.S. trade gap grew to $109.8 billion in March, a 22.8-percent jump from February, as Americans grabbed more cars, clothing, and computers and industry bought more supplies, the U.S. commerce department reported.
Before the COVID virus arrived, the monthly deficit typically ranged between $40 billion and $50 billion, The Wall Street Journal noted.
Imports totaled $351.5 billion, up 10.2 percent. Exports grew by 5.6 percent as the country shipped more industrial goods and welcomed more foreign visitors, revenue from which is counted among exports.
The U.S. imported the most petroleum since December 2014, following president Joe Biden’s ban on Russian oil, although Russia’s petroleum had supplied no more than 5 percent of American oil imports.
The Ukraine war, Western sanctions, and China’s widespread lockdowns to fight the COVID virus paint a gloomy picture for the trade imbalance in April and May, especially if Americans keep buying at a zesty pace, the Journal noted…
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“It’s that story of robust economic demand at home versus a weak backdrop abroad,” U.S. economist Mahir Rasheed at Oxford Economics told the WSJ.
The trade chasm will remain wide in the months ahead, he predicted, although high prices might combine with the U.S. Federal Reserve’s higher interest rates to cool consumers’ enthusiasm for buying.
Americans blame politicians or foreign countries for inflation but ignore their own responsibility: constant spending on non-essentials drives inflation.
We emphasize what we forecast in “U.S. Loses Trade War: February Trade Deficit Near Record”: The U.S. trade deficit will continue at or near a record clip not only while the Ukraine war remains unsettled, but long after.
As we noted in “Trade Deficit USA: “We’re No. 1!”, until America becomes more of a self-sustaining economy and brings more manufacturing back home, the trade deficit will continue to increase as long as Americans insist on buying the newest smartphone, a television for every room, and the latest $150 sport shoe.
If inflation has a silver lining, it might be that higher prices will force Americans to rediscover thrift as a virtue. We saw consumer spending beginning to bend in this direction in March, which we reported in “Highest Inflation in 40 Years Curbs Consumer Spending”.
TOP 2022 TREND
DRAGFLATION: EUROZONE RETAIL SALES TANK
Retail sales across the 19 countries using the euro currency slipped 0.4 percent in March, three times more than the 0.1 percent expected by economists Reuters had surveyed.
Sales dropped 4 percent in Spain; France and Germany also saw sharp declines.
People bought more food, drinks, and tobacco, but less non-food consumer products, motor fuel, and less online and from mail-order retailers.
The slump fueled fears that record inflation, the war in Ukraine, and Western sanctions have negated any post-COVID economic resurgence, the Financial Times said…
Costs for energy and food have surged amid a record inflation rate of 7.5 percent in April, further shrinking household purchasing power.
The Eurozone’s service sector grew in April, according to S&P Global, but it is “unclear whether the service sector can sustain its current growth once the initial rebound from the reopening of the economy fades, especially given the soaring cost of living,” S&P Economist Chris Williamson told the FT.
The zone’s index of consumer sentiment sank to a two-year low last month, with fewer people planning to make large purchases, the European Commission reported.
Falling sales, rising inflation, the Ukraine war and its sanctions, and the European Central Bank’s inaction on interest rates all point in the same direction: toward Dragflation, our Top 2022 Trend defined by rising prices and shrinking economic activity.
The groundwork for Europe’s current predicament was laid during the COVID War, when so many businesses were destroyed by lockdowns.
Barring a dramatic and unexpected event, Europe will enter Dragflation this year; declining gross domestic product and rising inflation.
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