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A further look at declining international trade

Published on 7 Comments on A further look at declining international trade

As I mentioned yesterday, the WTO forecasts a sharp slowdown in international trade next year. What does that look like in the US right now?

There's no obvious interpretation to this. Trade has been increasing steadily since 2021, and then took a sharp upward turn in March. Since then it's been declining. Is that because the economy is slowing or because it's just reverting to the mean after the March spike?

Maybe a bit of both, but it's not really possible to say yet. However, the Wall Street Journal passes this along:

New orders of overseas products are declining all over the place. The US is the strongest of the lot, but even at that it's been in negative territory since June (anything below 50 indicates a slowdown in activity).

Best guess: international trade is declining after a hot 2021. This is just another addition to dozens of pieces of evidence that all point in the same direction: Economies ran hot in 2021, producing the underlying circumstances that caused core inflation to rise. But nearly every one of these underlying factors peaked and started to decline in early 2022.

NOTE: The chart shows only trade in goods because trade in services is pretty much the same every month. Focusing on goods does a better job of illustrating the change in trade.

7 thoughts on “A further look at declining international trade”

  1. Jasper_in_Boston

    Trade has been increasing steadily since 2021, and then took a sharp upward turn in March. Since then it's been declining. Is that because the economy is slowing or because it's just reverting to the mean after the March spike?

    Reduction in oil prices could have had something to do with it, as well as (relatedly) the rising dollar over this summer (making imports cheaper).

    But yeah, sure looks like the major economies are synched up for some deflation.

    1. dvhall99

      My local Home Depot still has lots of patio furniture on sale. In a typical year, ALL the patio furniture is gone by August. They have a wall full of lawnmowers still available, when they almost never have any past the end of summer. In 2020 and 2021, customers gobbled up outdoor furniture, gardening implements, lawn mowers and bbq grills as fast as they came in. So it looks like the company ordered based on the ridiculous volume sold since the start of COViD, not realizing that customers don’t need to buy this stuff every year.

  3. jte21

    OT, but in other news from my little corner of the world, Micron Technologies has decided to build the world's largest computer chip plant in Central New York a little outside Syracuse. Total investment over the next 20 years could be as much as $100 billion. Made possible in part by the CHIP Act Biden signed earlier this summer. Go Dark Brandon!

    https://www.syracuse.com/business/2022/10/micron-picks-syracuse-suburb-for-huge-computer-chip-plant-that-would-bring-up-to-9000-jobs.html

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