WORLD TRADE IS FALLING
The recent stock market fall appears to be in reaction
to weakness in foreign economies, not domestic developments
in the US.
One measure to watch is world trade.
from December to May world trade volume fell -3.4%.
Interestingly, in the first five months of the 1971
decline trade fell -3.5%, essentially the same as this drop.
The year over year growth rate is 0.4%. The year over year
change in world trade has only turned negative twice sine 1990,
as far back as this data series goes. For what it is worth
those two declines also coincided with US recessions.
For now, the critical question is how much of the weak growth
abroad impact US growth. Almost certainly the impact is likely
to be significant.
“For now, the critical question is how much of the weak growth abroad impact US growth.”
A better question would be, how much has the slow growth in the US and Europe impacted the world growth.
I looked at the website cited in your graph and downloaded the spreadsheet for May 2015. It appears that the index is set for 100 in 2005 and it says that the 2005 world trade was $10469.6Billion.
If world trade is measured in dollars and the price of oil has been falling, wouldn’t that artificially lower the world trade growth stat?
good point, Jim…falling prices of commodities, which have crashed to 13 year lows, have made month over month and year over year comparisons from almost all currency denominated reports hard to decipher if not meaningless…but in support of Spencer’s point i’d note that exports from China were down 8%, from Korea, about 4%, and from Japan down nearly 2%…those are countries who generally arent commodity exporters…
That was my question. How much of what we are seeing is related to oil price? Though then the question becomes how much of oil price is do to increased supply vs decline in use?
Our trade deficit has only risen, but is that relative to our lack of exports (which oil was our largest for a while) or that we are consuming more or is it relative to us producing less at home. Has our consumption of other than capital improvements and raw materials leveled off/declined and shifted to more imports to keep the level of consumption thus greater appearing trade imbalance?
When the nation in the world that everyone has been using for producing consumer level stuff is seeing it’s exports decline, you have to assume the nations doing the buying are not doing well.
China’s exports down 8% from December 2014 to May 2015?
Do you have a link for that export data? It is not on the spreadsheet I downloaded.
Jim, that was the most recent month over month drop…
China economy: July exports slump 8%
here’s this week’s story on a shipping index, which wouldnt be currency denominated:
World shipping slump deepens as China retreats – World shipping has fallen into a deep slump over the late summer, dashing hopes of a quick recovery from the global trade recession earlier this year and heightening fears that the six-year economic expansion may be on its last legs. Freight rates for container shipping from Asia to Europe fell by over 20pc in the second week of August, even though trade volumes should be picking up at this time of the year. The Shanghai Containerized Freight Index (SCFI) for routes to north European ports crashed by 23pc in five trading days.
There is now a full-blown August storm sweeping through global markets. The Bloomberg commodity index dropped to a fresh 13-year low on Monday and the MSCI index of emerging market equities touched depths not seen since August 2009. A closely-watched gauge of emerging market currencies has fallen for the eighth week – the longest run of unbroken declines since the beginning of the century – led by the Malaysian Ringgit, the Russian rouble and the Turkish lira.
Sorry, I have been out all day.
I though my comments and the chart title made it clear that this is the volume of trade, or trade adjusted for price changes to yield real values.
So the drop in oil and commodity does not impact the data, but it is the same factors causing both prices and volume to fall.
JmH, note that the chart title says 2005=100.
Spencer England wrote: “I though my comments and the chart title made it clear that this is the volume of trade, or trade adjusted for price changes to yield real values.”
And the spreadsheet at http://www.cpb.nl/en/number/cpb-world-trade-monitor-may-2015 also indicates “Volumes, seasonally adjusted” in column B.
But column D of that spreadsheet has a label of “Values 2005, usd bln” followed by dollar amounts in that column.
Thus my confusion. It looks like they are measuring volume by the value.
Spencer, sorry for not catching that; i didnt even expand the chart, much less download the data..
jim, i’m guessing that “Values 2005, usd bln” on that spreadsheet are in chained 2005 dollars, much like our GDP was once adjusted for inflation (now we’re on chained 2009 dollars) – i have objected to the use of “dollars” on that denomination for just the reason you’ve illustrated here, that it leads to confusion…those chained dollar indexes would be better thought of as quantity indexes; in fact, when i refer to them in my own writing, i leave the dollar signs off the amounts altogether…
Enough with all the incredulous prognosticating and obfuscation. We cannot see where we are going if we are always-only looking through the rear view mirror. We must have more forward-critical thinking of the Kieretsu and Hosin Kanri mind set. We have been our own worse enemy. We made the China bubble what it is today with our unchecked greed. My job went to China long ago and nobody cared. Yes I’m still angry but today I see a candidate reselling-repackaging-remarketing “The American Dream” very successfully. My only fear now is that someone from will attempt to silence that dream that will change to course of American history.
Your dream started dying in the late seventies with the skewing of productivity gains to capital over labor and the beginnings of its demise. You were nothing but a pawn in this drama as those with far greater power than you, including your savior, made the decisions for short term profits over the welfare of a nation. If you disregard the history of how we arrived at the point, then you are doomed to continue to make the same mistakes over and over again reliving the same and caught in a perpetual “Groundhog Day.”
Run75441 wrote: “If you disregard the history of how we arrived at the point, then you are doomed to continue to make the same mistakes over and over again reliving the same and caught in a perpetual “Groundhog Day.””
And misinterpreting that history is just as bad.
Fair enough Jim
dan, when you brought up oil imports and exports in your comment here Friday, i almost responded, because i already knew our imports the prior week were the highest since April 3, since i watch the reports and write about that stuff every weekend…maybe since i didn’t, i continued to think about that and took a closer look at it yesterday than i normally do, which i have just posted online…turns out our net imports of oil and oil products, ie imports minus exports, were the highest they’ve ever been this year in the week ending August 12th…here’s the relevant excerpt, without the links to the data sets i cited:
despite that, the industry is pushing to have the 40 year old crude oil export ban repealed; it’s already passed the House. why? simple; international oil prices have been running between $5 and $10 a barrel more than US oil prices. dont have to tell you what will happen to US prices if that happens…
Like oil production, refining is a cartel in itself and matching refining to demand is profitable. Anyhoo here is a chart to help you along. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOPUEUS2&f=M
yeah, bill, i mine the EIA datasets every week, and the weekly EIA reports are where all the numbers above came from…not surprisingly, the refiners are not passing through all of their lower costs to the consumers…the difference between crude oil and gasoline prices has increased by more than 50% from a year ago, so the pure refiners are making a bundle…the oil majors are using refinery profits to offset exploration and exploitation losses, and they all saw big downturns in 2nd quarter earnings anyway…and probably half the independent drillers i looked at in the first two weeks of August saw losses in the 2nd quarter, and that was when oil prices were 50% higher than they are now…
I monitor the Census real trade data and it shows that POL ( petroleum, oils & lubricants) is now equal to almost 50% of exports. that is partly a function of weaker imports,bottleneck but real exports have been growing at double digit rates for several years.
West Texas Intermediate is selling at a discount to Brent, partially because of transportation bottlenecks. The Gulf Coast refiners are taking advantage of this discount to refine WTI and sell it in Europe where the refiners use Brent oil.
The Keystone pipeline could eliminate this unusual spread and the US refiners would lose their price advantage — oil companies should be careful of what you wish for. Of course at today’s prices the Keystone pipeline is not profitable.
the BP refinery in Whiting i mentioned above was one of the main processors of heavy crude such as dilbit from Canada, which is coming in to the US through the Enbridge pipeline system (Steve Horn at Desmogblog has had a series on how the “Keystone clone” , from Alberta to Lake Superior to the Fleming pipeline in Illinois, was quietly approved under the radar)
at any rate, with Whiting down, maybe for a month, there’s no one around to process West Canada Select…i saw it quoted with an $18 handle last week, when WTI was in the 40s…WTI has been trading with a $38 handle all morning, so they’re probably having trouble giving that tar sands output away by now…