China, Federal Reserve, Issues, Trade

Global trade down about 9 percent since 2014

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Global trade is collapsing. In March, the U.S. trade deficit took a big hit, dropping 13.8 percent amid an $8 billion contraction in imports and a $2 billion shrinking of exports, according to data compiled by the U.S. Census Bureau.

That’s usually not a good sign, U.S. Commerce Department data shows. Narrowing trade gaps and drops in imports and exports have coincided with recessions in 2008, 2001, 1991, 1980, and 1975.

ExportsImports1970-2015

That is because as imports from overseas dry up, it is an overall indicator of global trade slowing down. And there is little question imports have been slowing down. They are down 8.6 percent off their average 2014 levels.

Exports are way down too, down 9.5 percent from 2014.

So, what does it all mean?

While not perfect, the relationship between trade slowdowns and eventual recessions is a fairly reliable indicator. When both imports and exports take a hit that can often indicate or predict a recession.

And with continued stagnation in Europe plus the correction in China and another slowdown here, perhaps we really are on the cusp of the next recession. Which averaging one every six to seven years, we’re due anyway.

It all comes as the Federal Reserve considers another hike in interest rates, which could be another red flag. The Fed tends to hike rates before the economy goes into negative territory — perhaps so they simply have room to maneuver afterward.

A rate hike in June, then, could be read a signal of capitulation by the Fed on this period growth.

With employment population ratios still sliding, incomes flat after years and Americans feeling bad about the economy, a recession may reflect the overall mood of the nation.

The nation still has too much debt. Younger Americans are failing to enter the labor force. And robust growth is still nowhere to be found.

The economy has not grown above an inflation-adjusted 4 percent since 2000, and not above 3 percent since 2005.

The economy stinks.

After trillions of dollars of fiscal and monetary stimulus, bailouts and subsidies, the only people who seem to be getting ahead are politically connected insiders. In the meantime, those on the outside of the favor factory in the Capitol feel they are getting screwed.

The narrowing trade deficit is just one symptom of the weak economy. But the real deficit is one of public confidence — in Washington, D.C. to do anything about it.

This is a guest post by Robert Romano senior editor of Americans for Limited Government.
  • Robert

    What do you expect when the jobs are moved to countries where the workers are more like slaves than humans and are paid nothing, even they can not afford what they make, It in turn makes the Ric Richer while the working Class get less, this is Conservatism in action Let the rich control the country and see how far it gets, We buy the products from the companies that moved to slave labor countries so they could make more money and we make less. Government Contractors as trhe saying goes will not be oversold, A foriegn Corporation can build the biggest cruise ship in the world with all the luxuries there could be imagined for $1.4 Billion and the American Government paid $7 billion for its newest Submarine and $3.1 Billion for the new destroyer that will probably be put aside because it can not do what the Military wants and it is only 1/10 as big as the cruise ship.
    We now export a lot of farm products which is going to be reduced shortly because other countries have found out they can grow their own cheaper and put people to work at the same time.
    THE US CORPORATIONS ARE CAUSING OUR DEMISE AS A #1 COMPANY NOT THE SO CALLED LIBERALS,
    WAKE UP AND PAY ATTENTION TO WHAT IS GOING ON IN THE US AND WORLD AND YOU WILLSEE THIS.
    HAVE A GOOD DAY

  • Lime n coconut

    Financial destruction from the inside was the plan.
    No jobs but spend trillions pretending so- money is in the hands of evil.

    Then massive regulation for only americans not imports or illegals.

    Massive pork to hide money in the hands of evil.

    Obanacare which is not care, it was to destroy healthcare a wonderful industry in usa ( all communists take out healthcare- can you say castro or hitler/ they did it too)

    Take out prosperous industry such as automotive, hitler did that another commy and detroit dems ruined the biggest undustry in 60 short years- pretending to be for the people but making more regulation, massive welfare, dumbing down, dividing and basically ruining culters- they ruined the Indians and the blacks, now working on the hispanics!

    The problem is with dicialism it ruins everything and yge only obes tgat bebefit financially are the dems, the leaders such as the left anf they blame everyone else to jeep the eye iff the agenda id “social justice” aka socialism to step into communidm.

    45 communust goals are in the 1965 cogressim record- look who voted for these rules- one hint the same goofs tgat boted for obanacare without teafjng it.

    Its fast tracking to vommunism and half of usa will die frfast –

    Should have gollowsed the laws forefathers warned us about such as gree doeach and keeping guns do govt doesnt divide and dedtroy!

    Freedom is only free if you can keep it from evil.

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