The Wilder View

Top 12 U.S. export markets are falling hard

The Census Bureau’s December release reiterates two things about U.S. trade: (1) the U.S. economy is seriously weak, but worse yet, (2) world demand for U.S. goods continues to tank. Import demand generally declines during U.S. recessions with shrinking aggregate demand, while export growth does not uniformly fall during recessions. But in this cycle, one thing is for sure: U.S. export growth is taking a nosedive, and has been negative at least two consecutive months for 9 out of the U.S.’ 12 biggest export markets.


This chart illustrates the Bureau of Economic Analysis’ measure of real export and import growth over the last eight recession (including the current cycle) since 1960. Generally, import demand falls during recessions with weakened spending from firms and consumers. However, export demand is less uniform in its behavior during U.S. recessions. Annual export growth turned negative during the 1973-75, 1981-82 and 2001 recessions, while it remained very positive during the 1969-70, 1980, and 1991-92 recessions.

But this time, it’s going to be bad, because export growth from each of our top twelve trading partners is falling…quickly. country_exports.png

This chart illustrates monthly goods (not including services) shipped to the U.S.’ top twelve export markets spanning Jan 2000 to December 2008. The obvious export plunge is underway across the U.S. primary export markets. The top six export markets by share are Canada (20% in December), Mexico (11.3%), and China (5.4%), Japan (5.06%), the U.K. (4.3%), while next six biggest export markets by share are France (2.03% in December), Singapore (2.31%), Belgium (2.35%), Brazil (2.36%), the Netherlands (2.84%), Republic of Korea (2.92%), and Germany (4.25%).

U.S. exports of goods have been declining in nine of the top 12 markets for at least two consecutive months. The U.K., Singapore, and France were the exception, but the December increase in exports to those markets was negligible, and only in December (November fell). But what really matters is the shift in exports to Canada, Mexico, and China, where December exports fell a massive 11.8%, (13% in November) 15% (19% in November), and 0.3% (14% in November), respectively.

The world is weak, as illustrated by the sharp downturn in U.S. exports.


This is why the fiscal bill is so important, as the trade channel for growth is all but dead. In fact, the normal mechanisms that propel the U.S. out of a recession – exports, inventory cycle, durable goods – are all out for the count. The news worsens with each day that passes.

Originally published at the News N Economics blog and reproduced here with the author’s permission.

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