While most of the nation’s economic concerns are riveted on continuing high unemployment, the slowing but still increasing deficit, and a manufacturing sector that can’t accelerate, little credit is being given to U.S. exports, which are continuing to roar at a record $2 trillion annual pace, representing more than one-eighth of America’s world leading gross domestic product.
But even though U.S. exports reached record all-time highs in late 2011, they have recently suffered slippage from their previous high point. March’s slight year-over-year drop in exports was the first since November 2009, the depth of the 2009-2010 great recession. A comparable 5.6% drop in U.S. imports was even worse, punctuated by shrinking offshore energy needs from abroad. Both exports and imports had been on a double digit uptick in 2011, as world trade seemed to have reversed from the ravages of the worldwide slump.
To put the current international commerce into perspective, global trade has averaged 5.3% a year for the past two decades, according to the World Trade Organization. Last year international trade commerce as a whole rose only 2%, and has already been downgraded to 3.3% from 4.5% in 2013. In the first post-recession recovery year, global trade jumped a torrid 14%.
Although U.S. exports have retained their $2 trillion annual average, as late as the April trade deficit figures, which are now averaging $40 billion at most, compared to $65 billion in the 2007 pre-recession year, both imports and exports are slowing. The inevitable export flattening out due to the “European community” recession and the Chinese manufacturing slowdown, have already had a depressing impact on U.S. manufacturing regeneration. This is reflected by a less than 50 index of the monthly Institute of Supply Management Report. Anything under 50 index is a drop off.
China’s comparable numbers also dropped to 49.2, the lowest since last October. Even Chinese exports, including those from U.S. facilities’ production in that nation, resulted in slight drop offs to America, but sharp downturns in shipments to Europe. This does not bode well for economic improvement in the months ahead, but there is enough internal development to keep American businesses’ heads about water.
However the lingering fear of the Federal Reserve Board’s “tapering off” in the months ahead of $85 billion per month of U.S. Treasury Debt offerings and mortgage-backed derivatives, may prove premature. While the end of the 2013 fiscal year is fast approaching, the relative tranquility of America’s economic dynamics and no further deterioration of unemployment, may wake up to a more sinister reality by the Oct. 1 beginning of the new fiscal year.
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