• About

RealityChek

~ So Much Nonsense Out There, So Little Time….

Tag Archives: Ireland

(What’s Left of) Our Economy: Is the New U.S. Trade Report a Virus Portent or Anomaly?

05 Tuesday May 2020

Posted by Alan Tonelson in (What's Left of) Our Economy

≈ Leave a comment

Tags

China, decoupling, Europe, healthcare goods, high tech goods trade, Ireland, manufacturing, pharmaceutical, pharmaceuticals, PPE, protective gear, services trade, Trade, trade deficit, travel services, {What's Left of) Our Economy

Were this morning’s latest monthly U.S. trade figures (for March) just one of those things? Or a sign of CCP Virus-affected trade patterns to come? Evidence for both propositions can be found in the weeds, though on balance I remain confident that as the nation’s economy remains gravely wounded (and could well face worse), its trade shortfall will continue its recent (and highly beneficial) Trump-era trend of narrowing.

The reasons for dismissing the new trade report as an outlier stem from the tendency (with numerous exceptions) of the gap to narrow when the economy weakens and to expand when it strengthens. So it was a real surprise to find that, from February to March, when all indicators showed that a major downturn was beginning thanks to the pandemic, the trade deficit rose a strong 11.57 percent – from a downwardly adjusted $39.81 billion to $44.42 billion.

Also surprising for a U.S. economy that’s not very export focused but that’s usually voracious importer: The main reason for the deficit’s growth both in absolute and percentage terms was a drop-off in the former. In March, total U.S. overseas sales sank on month by 9.63 percent, from an upwardly adjusted $207.75 billion to $187.75 billion. That was the lowest monthly total since November, 2016’s $185.49 billion. Combined goods and services imports were down, too – but by a smaller 6.22 percent, from an upwardly adjusted $247.56 billion to $232.16 billion. That total was the lowest for a month since December, 2016 ($234.56 billion).

Moreover, in terms of the trade balance, March’s worse U.S. performance can’t be pinned on the virus-produced collapse in travel. Make no mistake about it – international travel both to and from the United States did collapse. In value terms, two-way travel sank from $28.77 billion in February to $13.49 billion. In other words, it was more than cut in half. But the travel services trade surplus actually improved during that period – from $4.53 billion to $4.72 billion. That means not only that, on net, legal visitors to the United States (including students) as usual spent more in America than Americans spent overseas between February and March. It means that foreign spending in the United States exceeded Americans’ spending abroad by an even greater amount.

Another puzzling result that doesn’t have obvious staying power – at least not to me: The biggest single contibutor to the March trade deficit increase was a more than doubling of the monthly goods trade shortfall with Europe – from $11.37 billion to $22.97 billion. That’s the biggest monthly total ever and the biggest absolute increase ever (the figures go back to 1997), and the third biggest percentage increase of all time (after July, 1997’s 418.80 percent and March, 1998’s 205.89 percent – both totals coming when trade volumes were much smaller, and big percentage increases therefore much easier to generate).

The big Europe merchandise trade deficit surge, moreover, came on the the import side. These soared to $56.04 billion in March (another record), and the 26.42 percent sequential rise was the biggest since March, 2011’s 29.35 percent.

U.S. goods exports to Europe didn’t do badly – they hit $33.07 billion in March, the third best total ever. But the monthly increase was a bare 0.26 percent.

Some of the Europe trade results were due to a much bigger goods deficit and much greater goods imports from Ireland – which is a major foreign supplier of pharmaceuticals to the United States. Despite the overall sequential decrease in American merchandise exports and imports in March, trade in pharmaceutical preparations rose both coming and going. The trade shortfall increased by 13.25 percent, with imports rising by 14.92 percent. And the goods trade gap with Ireland (not all due to pharmaceuticals, to be sure) soared by 45.81 percent with imports up 41.91 percent.

It’s true that both the deficit with Ireland and imports from the Emerald Isle fell sharply on month in February. But both totals were all-time highs.

At the same time, India is another big pharmaceutical supplier to the United States, and although its March merchandise trade deficit with America shot up by 47.87 percent month-to-month, imports actually dipped (by 0.37 percent).

And what about March U.S. trade with China – which gave the world the virus, and remains a major supplier of the chemical building blocks of pharmaceutical products as well as protective medical gear?

In an unmistakably good development for those who recognize both the health security and broader economic dangers of doing extensive business with a predatory trader that’s increasingly hostile geopolitically, the U.S. merchandise trade deficit with the People’s Republic plummeted dramatically again – by just over 26 percent month-to-month, to $11.83 billion. You’d have to go back to March, 2004 to find a lower monthly figure ($10.44 billion).

U.S. goods exports to China actually improved sequentially in March – by 16.98 percent, to $7.97 billion. That’s far from the biggest absolute or percentage monthly increase on record. But with China’s economic growth at multi-decade lows due largely to the virus and the Trump tariffs, it’s encouraging that America’s goods exports to China have held up since the Phase One trade deal was signed in January.

U.S. goods imports from China, meanwhile, fell by 13.18 percent on month in March, to $19.81 billion. That total is the lowest since February, 2009 ($18.85 billion), during the depths of the Great Recession.

On a year-to-date basis, the American merchandise merchandise deficit with the People’s Republic is now down an astonishing 32.61 percent. That’s nearly three times more than the comparable drop in the global U.S. goods deficit, and a clear sign that trade diversion and decoupling from China are taking place even as the overall American trade gap narrows – and are likely to continue taking place.

Two other oddities worth noting in the March trade report. First, the manufacturing deficit rebounded from February’s $63.01 billion (the lowest total since February, 2017’s $60.47 billion) to $75.80 billion. That’s a very big 20.30 percent higher. Even though overseas markets for America’s domestic manufacturers are tumbling into recession and maybe worse along with the U.S. economy, manufacturing exports still managed a monthly gain of 3.55 percent in March – to $93.26 billion. But despite signs of weakness in domestic U.S. manufacturing and the overall economy, manufacturing imports shot up by 10.45 percent, to $169.06 billion. It’s difficult to see how either trend lasts until the CCP Virus is brought under control.

Incidentally, the March totals bring the manufacturing trade gap to $220.75 billion so far this year – down 7.01 percent from last year’s comparable $237.38 billion. Manufacturing exports year-to-date as of March are down four percent, and imports have declined 5.38 percent.

Similarly, the longstanding U.S. trade shortfall in high tech goods more than doubled sequentially in March, from $5.13 billion to $10.30 billion. Sure, this increase followed a 55.62 percent plunge in February, but the turnaround is still stunning. And although high tech exports rose in March on month by a healthy 8.55 percent, the big change, as in February, was on the import side – where U.S. purchases from abroad jumped by 22.24 percent.

More detailed March trade data — particularly shedding more light on U.S. trade in healthcare-related goods — should be out from the federal government shortly, and I’ll be sure to keep you up to date on those developments.   

(What’s Left of) Our Economy: New Evidence that Greece’s Former Prosperity Really was Built on Sand

12 Sunday Jul 2015

Posted by Alan Tonelson in (What's Left of) Our Economy

≈ Leave a comment

Tags

bubbles, consumption, Europe, Eurozone, France, Greece, incomes, Ireland, Italy, Spain, {What's Left of) Our Economy

A new Pew Research Center report is a gold mine of information that I’ll be returning to in the next few days and weeks. But given the intensification of the Greece crisis this weekend, it seems especially important to note briefly what it shows about that country’s experience in the Eurozone. It’s especially revealing on how the easy access to credit made possible by Greece’s membership created one of history’s most stunning examples of false prosperity.

Among other statistics, Pew’s study of global incomes over the last decade presents figures on the shares of many national populations that could be classified as “high income” in 2001 and 2011. And the Greece numbers are mind-blowing. In 2001, 10.8 percent of Greeks belonged in the category with family per person income (or consumption) of $50 or more per day. (These figures are expressed in 2011 dollars adjusted for differences in price levels across countries.) By 2011, this share had more than doubled – to 23.8 percent. Moreover, the share of “upper middle income” ($30-$50 per capita per day) Greeks by this measure increased from 49.8 percent to 54.2 percent.

Even given the relatively low base from which Greek incomes began, it has to be significant that the only other countries in Western Europe that saw anything close to this progress were the continent’s other problem debtors. In Italy, for example, the high income share of the population just about doubled, from 17.1 percent to 34.8 percent. Spain saw 18.4 percent to 27.3 percent growth in this category, and the numbers were 21.2 percent to 36.2 percent in Ireland. (Pew did not present any figures for Portugal.)

Among economically and financially healthier Western European countries, oil rich Norway’s high income residents rose from 56.3 percent of the population to 77.2 percent, while the comparable numbers for France were 27.3 percent and 37.9 percent.

Moreover, Greece was a major out-performer in the Upper Middle class as well. In Italy, Spain, and Ireland, this group fell as a share of the population from 2001 to 2011. Ditto for France.

In case you’re wondering, the United States is one of the few wealthy countries studied that saw a decline in its share of the population living on more than $50 per day between 2001 and 2011 – from 58.2 percent to 55.7 percent. The Upper Middle class increased only from 31.4 percent of the American people to 31.9 percent. And therein hangs many a tale, as I’ll be reporting.

Blogs I Follow

  • Current Thoughts on Trade
  • Protecting U.S. Workers
  • Marc to Market
  • Alastair Winter
  • Smaulgld
  • Reclaim the American Dream
  • Mickey Kaus
  • David Stockman's Contra Corner
  • Washington Decoded
  • Upon Closer inspection
  • Keep America At Work
  • Sober Look
  • Credit Writedowns
  • GubbmintCheese
  • VoxEU.org: Recent Articles
  • Michael Pettis' CHINA FINANCIAL MARKETS
  • New Economic Populist
  • George Magnus

(What’s Left Of) Our Economy

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Our So-Called Foreign Policy

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Im-Politic

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Signs of the Apocalypse

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

The Brighter Side

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Those Stubborn Facts

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

The Snide World of Sports

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Guest Posts

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Create a free website or blog at WordPress.com.

Current Thoughts on Trade

Terence P. Stewart

Protecting U.S. Workers

Marc to Market

So Much Nonsense Out There, So Little Time....

Alastair Winter

Chief Economist at Daniel Stewart & Co - Trying to make sense of Global Markets, Macroeconomics & Politics

Smaulgld

Real Estate + Economics + Gold + Silver

Reclaim the American Dream

So Much Nonsense Out There, So Little Time....

Mickey Kaus

Kausfiles

David Stockman's Contra Corner

Washington Decoded

So Much Nonsense Out There, So Little Time....

Upon Closer inspection

Keep America At Work

Sober Look

So Much Nonsense Out There, So Little Time....

Credit Writedowns

Finance, Economics and Markets

GubbmintCheese

So Much Nonsense Out There, So Little Time....

VoxEU.org: Recent Articles

So Much Nonsense Out There, So Little Time....

Michael Pettis' CHINA FINANCIAL MARKETS

New Economic Populist

So Much Nonsense Out There, So Little Time....

George Magnus

So Much Nonsense Out There, So Little Time....

Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here: Cookie Policy
  • Follow Following
    • RealityChek
    • Join 5,362 other followers
    • Already have a WordPress.com account? Log in now.
    • RealityChek
    • Customize
    • Follow Following
    • Sign up
    • Log in
    • Report this content
    • View site in Reader
    • Manage subscriptions
    • Collapse this bar