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Trade data released on Tuesday showed flows continued to recover in August, Wells Fargo’s analysts point out. They warn imports are growing much faster than exports, setting up trade to be a sizeable drag on Q3 GDP growth. 

Key Quotes: 

“Trade flows continued to rebound from virus-related lows in August. But as imports continued to grow faster than exports, the overall U.S. trade balance widened to $67.1 billion.”

“The robust U.S. rebound has propelled import growth in recent months, which was up 3.2% in August. The relative strength in imports has been primarily due to soaring consumer demand for durable goods.”

“The August data leave imports just 3% below their pre-virus level, which is in stark contrast to exports, which remain down 18%.”

“The August report confirms that trade is set to be a sizable drag on second quarter growth. Nonetheless, the drag will be washed in the context of the nearly 30% annualized rate of GDP growth we’re forecasting.”

“The August data continue to show China is way behind its agreed-to purchase targets under the Phase One trade agreement with the United States.”