Monday, June 15, 2009

U.S. exports are rebounding (3)

Here's an update to a chart I've posted before, using the recently-released May data on container shipments and the April data on goods exports. It purports to show that the recent rise in outbound container shipments from the ports of Los Angeles and Long Beach portends a significant improvement in U.S. goods exports in coming months, something which would be unquestionably good news for the economy. We haven't seen improvement in the export data yet (blue line), but that data undoubtedly lags the ports' container count by at least a month or more. Outbound containers from Los Angeles have now reversed more than two-thirds of the precipitous drop in shipments that occurred from August last year through January of this year. That is an excellent indication, in my view, that last year's slump was largely temporary in nature. As Brian Wesbury notes, government mishandling of the financial crisis last year "set off a rare financial panic, the velocity of money plummeted, and economic activity collapsed." The panic started receding many months ago, and there are plenty of green shoots out there which suggest that the global economy is now coming back to life.


Anonymous said...

I hope you're right. My portfolio took a complete drubbing today.

My sense is that today's pain was due mostly to comments out of Russia. Of course they're trying to backpedal trash talking the dollar. They only hurt themselves when they do that. Nevertheless, the diversification away from USD continues unabated.

Scott Grannis said...

Have you noticed that the dollar is up 3.4% in the last two weeks? It's too soon to predict the demise of the dollar, even though the Fed's actions seem almost certain to result in a weaker dollar long-term.

Anonymous said...

> Have you noticed that the dollar is up 3.4% in the last two weeks?

Yeah, and most of that is in the last 3 days.

I'm not betting on the demise of the dollar anytime soon (longer term, sure), but I do expect treasuries to continue falling. I'm short 30 year (via ETFs), which has been painful the last few days.

My general opinion is that as the economy recovers, stocks and oil will catch fire (which I'm also exposed to via ETFs), but also the yield curve will steepen due to a confluence of factors, including inflation and diversifying reserves.

alstry said...


Outbound shipments generally rise this time of the year....HOWEVER, on a y/y basis outbound traffic was down 15.3%.

As happens practically EVERY year, you wanna bet outbound shipments start falling back to new lower lows in August of this year.

Granted outbound is not down as much as it was in the past few months....but down is down and exports this year are still DOWN double digits versus last year.

Sorta like saying the patient is getting worse...just getting worse at a slower rate than when the patient is actually getting better.....I will be the first to say that there is an "improvement."

Scott Grannis said...

alstry: A quick glance at the chart will show you that seasonal factors have very little to do with significant variations in container shipments. Also, doing a year over year comparison will show the there has been a major inflection point towards improvement. I think the only conclusion that can possibly be drawn is that exports are growing at a significant rate, and recouping last year's losses rapidly. Are you just another of those perma-bears?

alstry said...


Your chart utilizes a two year time increment which tends to distort y/y changes....

Here is a link to CalculatedRisk's one year chart......

I think you will find it paints a very different perspective.

As far a being a "perma bear", I just like to win and be right.

Scott Grannis said...

And I fail to see how the chart you link to paints a different picture than the one I'm describing.

alstry said...

It helps clarify that there is an annual seasonal pattern to Port Traffic.....imports more visible than exports....but a traffic pattern nontheless.

As I implied in my original comment, this years outbound traffic in May was not down as much as the past few months....but still down on a y/y basis.

Despite nuances of this debate....I have never understood the economic significance of the data you cite since it does not breakdown content.

Trying to extrapolate some material economic relevance from U.S. export container volume is challenging at best since most of the volume we export is trash....primarily consisting of waste paper and scrap metal.

Is it possible we are generating lots of scrap by tearing down more buildings under Obama's new program to level entire sections of cities and converting them into green fields???

The fact that American exports are rebounding is potentially meaningless without knowing the content of the exports.....and if recent trends are reflective of current volume.....most of it is trash.

Unknown said...

Well it is not manufacturing stuff for sure. We most be exporting all those unsold houses:

Industrial production decreased 1.1 percent in May after having fallen a downward-revised 0.7 percent in April. The average decrease in industrial production during the first three months of the year was 1.6 percent. Manufacturing output moved down 1.0 percent in May with broad-based declines across industries.

Public Library said...

However, it is interesting to see two wildly different perceptions of the same data coming from Calculated Risk.

"There has been some recovery in exports over the last few months (the year-over-year comparison was off 30% from December through February). But this is the 3nd worst YoY comparison for imports - only February and April were worse. So imports from Asia appear especially weak.

This suggests a little more improvement in the trade balance with Asia in the May trade report. Of course the overall trade deficit will probably be worse because of rising oil prices."

alstry said...


It is not very difficult to see that the economy is sucking wind and conditions are getting much worse.

Just look at BestBuy's same store sales data being DOWN 6%......and that is AFTER the closing of its big box competitor Circuit City and gaining market share

Could you imagine how bad SSS data would be if Circuit was still open?

Compounding the problem now is Obama cutting off CA from credit.....and that is exactly what he should have done.....

Watch what happens to CA's economy now that it has to spend within its guess is that practically every home in CA will drop in value AT LEAST 50% from it current value within 12-18 months as CA's economy implodes....

If The Governator tries to raise taxes to cover the debt gap....expect home prices to decline further as most of the wealthy leave to live in lower taxed states.

Scott Grannis said...

Public: I've been reading CalculatedRisk for some time now, and it appears to me that it has a definite bearish bias. Year over year comparisons are almost meaningless in this environment. You've got to look at change on the margin, which has been almost uniformly good.

Public Library said...

The CA housing market is definitely set for another down leg. There are several reasons for this.

Firstly, housing cycles generally take years to work through and this last episode was of astronomical proportions.

Second, the current housing activity is reminiscent of people trading on the belief the most recent past (ridiculously rising house prices) represents their opportunity to profit in the near future when it assuredly rallies again. Good luck with that strategy. Check Japan real estate values then and now, and “then” refers to the 80’s. While you are at it checkout the Nikkei and Nasdaq then and now while you are at it.

Thirdly, CA taxes are headed North across the board. The CA fiscal position is a truly sad state of affairs, no pun intended.

Finally, there are no miracle cures to solve our problems. It will require sacrifice, hard work, and fiscal responsibility for years to come. As of yet we have not taken the first steps on the eventual road to recovery. All we have accomplished is expanding the Government and the national debt at alarming rates. This will not deliver us from this calamity.

Hard times lay ahead. Tread cautiously.

Unknown said...

not sure how you see velocity of money plummeting last year.
Despite a sharp drop in GDP, if you take money supply and divide it into GDP I think it is less than 2X but not much

Cabodog said...

My Costco-observation-index says that sales are picking up.

The "COI" is our informal observation of shopping cart contents during trips to Costco.

During the winter, shopping carts were mainly stocked with essentials -- food -- and barren of things like tools, TVs, cameras, etc.

We've noticed more non-essentials in the carts during the last six weeks. A trip two days ago noted three large-screen TVs in the checkout lines. Our community is one of the hardest hit by the recession, so nice to see big-ticket items moving again.

Scott Grannis said...

Herbert: the velocity calculation is relatively simple: GDP divided by M2. Nominal GDP grew 1.2% in 2008, while M2 grew 9.6%, so velocity fell--down about 7.6% for the year. The drop in velocity was most pronounced in the fourth quarter, when it fell 5.6%.

Interestingly, M2 velocity has now returned to the same level as it averaged from 1960-1985.