Trade Deficit Widens as Consumer Spending Remains Strong, Job Market Still Healthy

- The Trade Deficit for August widened to -$69.9 billion versus estimates of -$66.7 billion and -$68.0 billion in July.
- Initial Jobless Claims for last were 308K versus estimates of 311K and 304K the prior week.
- Continuing Claims were 2445K versus estimates of 2445K and 2440K prior.

BOTTOM LINE: The US trade deficit unexpectedly widened to $69.9 billion in August on a surge in imports related to strong consumer spending in the US, Bloomberg reported. US exports rose 2.3% to $122.4 billion. Consumer products imported rose $678 million to an all-time high in August, boosted by apparel, TVs and appliances. The value of crude oil imports rose to $27.2 billion as the average price of oil increased to $66.12/bbl. from $64.84. Oil has since plunged over 20% which should help lower the trade deficit going forward.

First-time claims for jobless benefits rose slightly last week from a 2-month low to a level that is still consistent with a resilient labor market, Bloomberg said. The four-week moving average of claims fell to 313,250 from 314,000 the prior week. Economists are now saying weekly jobless claims may be a better gauge of the health of the job market after the Labor Department disclosed last week that it had undercounted payrolls by almost 1 million workers over the last 12 months. The unemployment rate is 4.6%, low by historic standards. The unemployment rate among those eligible for jobless benefits, which tracks the unemployment rate, held steady at a low 1.9%. Job growth is averaging 137,000 a month so far this year, above the 100,000 needed to keep unemployment from rising. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor costs increases.