China’s trade deficit reached its highest level since 1989, posting a negative $31.5 billion in February. One of the causes was a drop in demand for finished goods put out by factories, which has been undermined by the recession in Europe. Imports were affected by the rise in costs of raw materials, which include oil. The trend is likely to persist as long as Brent remains above $115. Analysts believe that the import picture actually was good. If China is importing, it must be to build goods for export. That theory is undercut by the cost of fuel, which may only have increased because of inflation of its price.
Greece Gets Bailout Funds
Greek officials said that money has been released to it as part of a rescue package and that a new day has dawned for the southern European nation. Finance Minister Evangelos Venizelos said his nation has a “new starting point” when he was interviewed by CNBC. That is hardly likely. Many economists believe that another bailout is only two or three years away. Greek gross domestic product continues to contract at a 5% or greater level. Unemployment is well over 14% and on the rise. Even with government expense cuts, it is hard to imagine how the country can bring down deficits and cut into the size of its national debt.
Apple iPad Delay
Apple (NASDAQ: AAPL) has run out of new iPads. It was supposed to deliver the first orders on March 16. That date has been pushed back to March 19. Consumers should expect that supplies also will be tight at Apple stores and retail outlets of partners AT&T (NYSE: T) and Verizon Wireless. Short supply of new products has not hurt Apple in the past. People have shown that they are willing to stand in long lines to be among the first to own new Apple products. And the delays never seem to undermine online orders.
Gas Prices Up Again
There has been no relief in gasoline prices. The average cost of a gallon of regular reached $3.80 over the weekend. The trend is still rapidly toward $4. A new Gallup poll shows that most consumers will sharply curtail their buying activity if the price of gas moves over $5.30. People with low incomes will pull back well before then. Gas prices remain the most likely cause for a new U.S. recession.
Douglas A. McIntyre