Trade data for December was somewhat better than expected. This, combined with stronger data on construction and inventories, will likely boost Q4/12 GDP from -0.1% to a small positive gain.
But stepping back from the recent numbers, what stands out to me is the incredible progress that the U.S. economy has made in the past 20 years on the international trade front. In 1992, imports and exports of goods and services both represented about 7-8% of GDP. Since that time, exports have grown to over 13% of GDP, and imports to over 16% of GDP. Exports, in other words, have grown 75% more than GDP, and imports have more than doubled relative to GDP.
The U.S. economy is finally becoming globalized, like most of the world's other major economies. The growth of international trade is an unqualified good thing, for us and for the rest of the world. It makes economies more efficient and boosts standards of living everywhere. The more the better. This is one of the reasons why it doesn't pay to underestimate the ability of the U.S. economy to overcome adversity.
50% of Germany's GDP is exports. 98% of Nestle's sales are non-domestic. The smaller the country, the higher the share of trade. It says relatively little about its future. The US would have much higher number if each state reported inter-state trade.
ReplyDeleteThis is yet another reason it is not the 1970s anymore (despite my wish that I could fit in my bellbottoms and do some disco without my kids laughing at me).
ReplyDeleteUnions have died; trade has exploded, sectors of the economy (finance, retail, transportation) have been deregged or transformed. (Remember Reg Q and passbook accounts? No, Then shut up you young punk. How about fixed airline rates and good-looking stewardesses? Or fixed commissions on Wall Street).
Inflationary biases in the economy have been killed in the last 40 years.
This is good news.
Inflation is not the threat anymore.
Deflation, Japanification? Maybe.
Scott Grannis, keep the disco pants, but adjust your economics.....
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ReplyDeleteThe US economy is definitely starting to grow (perhaps because of QE, but who knows) -- however, I will admit that I was apparently very wrong about an imminent California blowup -- more at:
ReplyDeletehttp://www.sacbee.com/2013/01/25/5140011/jerry-brown-says-california-has.html
The all Democrat California government (Assembly and Governorship) seems to be leading a revenue recovery -- I am not sure what this means for the future.
How California goes, the other states will go...
the US Fed’s ZIRP, an Quantitative Easing, the ECB’s LTROs and OMT, the BoJ’s Unlimited Easing and PBOC monetary injections have stimulated global growth and trade, as well as have developed corporate profitability.
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