Wednesday, August 25, 2010

International Air Travel Shows Continuing Strength in July; Volumes are Above Pre-Recession Levels

Updated Graph (back to 2007)
Sydney - "The International Air Transport Association (IATA) announced international scheduled traffic statistics for July which showed continued strengthening of demand for both passenger and cargo traffic. Compared to July 2009, international passenger demand was up 9.2% while international scheduled freight traffic showed a 22.7% improvement (see chart above).

These year-on-year comparisons for July were less than the June growth data showing 11.6% and 26.6% increases for passenger and cargo traffic, respectively. The apparent slowdown was entirely due to the fact that by July 2009 traffic was already starting to recover. After adjusting for seasonality, the improvement in demand was faster month-to-month in July than it was in June."

Other highlights include:

1. July global passenger traffic was 3% higher than the pre-crisis levels of early 2008.

2. July global cargo demand was 4% higher than pre-crisis levels in early 2008.

3. Year-to-date global freight volume is 27.5% higher than 2009. 

4. During the second half of 2009, demand was rebounding at an annualized rate of 12% for passenger and 28% for cargo. In the year to July, the annualized growth rates had dropped to 8% for passenger and 17% for air freight. However, this is still considerably above the industry’s traditional 6% growth trend.

MP: International air travel (passenger and freight volumes) are both above the pre-crisis levels in early 2008, and the annualized growth rates (8% for passengers and 17% for freight) of 6%.

26 Comments:

At 8/25/2010 7:46 AM, OpenID American Delight said...

Which highlights how silly our airport security approach is. We can strip search ourselves, but jihadists paying in cash with one-way tickets like the Christmas bomber are still going to fly in from overseas airports without facing any screening.

And now international air travel is on the upswing? Great!

 
At 8/25/2010 9:06 AM, Blogger QT said...

Mark,

Would be interesting if the chart went back a bit further before the recession & financial crisis (ie. 2006-7) particularly on freight. Passenger travel has been down for several years so the passenger side doesn't really tell us as much about the way the international economy is going.

 
At 8/25/2010 9:21 AM, Blogger VangelV said...

The stats are not telling us much about the health of the real American economy. We already know that the developing world did not get hit as hard by the 2008 contraction as the West did.

 
At 8/25/2010 11:26 AM, Blogger Benjamin said...

I like Perry's optimism, but still..a lot of these charts are showing sag recently, like this one. The lines are beginning to head back down.
And new home sales just hit record low. The nation is in a recession, but real estate is in a depression.
As long as real estate stays underwater, banks will be weak, and small business owners will lack collateral to borrow money.
We need an aggressively expansionist Fed.

 
At 8/25/2010 12:08 PM, Blogger VangelV said...

We need an aggressively expansionist Fed.

No, you do not. That way leads to the destruction of the currency and the fall of the United States. What you need is to have the government and the Fed let the market liquidate lousy investments so that a real and sustainable recovery can begin.

 
At 8/25/2010 1:25 PM, Blogger Benjamin said...

Jeez, Vange, destruction of currency? We may be in deflation now.

BTW, Japan's currency is so strong it has increased its value relative to gold in the last two decades. Check it out. Gold is worth less in yen as the years go by.

Yet Japan is in a perma-recession, and its Nikkei Dow is off 75 percent, as well as property markets the same down.

A strong cuurency may provide minimal psychic income, but you cannot eat that.

The BOJ still talks about the need for price stability, to protect the yen. Some people never learn, especially central bankers.

The problem with having a fetish about money and gold etc. is that most investors are people. They want to make money, they want to borrow against assets, such as real estate.

Deflation crushes all that. Mild inflation, especially in real estate, helps investors.

The best US decade ever: The 1990s. Low inflation, federal surpluses, a surging Dow, huge employment growth, great economy.

The dollar was notably weak in the 1990s.

Explain Japan, the strong yen, and the 1990s USA with a weak dollar.

Be pragmatic. You gotta go with what works, and not worship at the gold altar.

Also, read The Money Illusion, a great blog.

 
At 8/25/2010 1:39 PM, Blogger VangelV said...

Jeez, Vange, destruction of currency? We may be in deflation now.

If by deflation you mean that some prices are falling you are right. But the price of real estate needs to come down by 30-50% to reflect the ability of people to afford homes and the price of some goods and services need to readjust to reality. You conveniently ignore that the bubbles that have plagued us were created by the Fed's use of liquidity to prevent corrections in the first place. You are now advocating that the Fed blow up yet another bubble, most likely precious metals, food, and energy so that the fools who borrowed more than they should have are bailed out to make bad decisions yet again.

For the record, that is fine by me. While I advocate what should be done, I make my living by betting that the opposite actions will be taken.

BTW, Japan's currency is so strong it has increased its value relative to gold in the last two decades. Check it out. Gold is worth less in yen as the years go by.

The price of gold in Yen has been going up steadily since the 1999/2000 lows just as it has in all currencies. Please note that Japan is still a savings nation and does not need foreigners to buy its debt as the US does. For a parallel you might compare the US to Argentina.

Yet Japan is in a perma-recession, and its Nikkei Dow is off 75 percent, as well as property markets the same down.

Yes it is. The government refused to allow the lousy companies to go under so the Japanese have seen a stagnant economy that has been living off its manufacturing success for two decades.

 
At 8/25/2010 1:46 PM, Blogger VangelV said...

A strong cuurency may provide minimal psychic income, but you cannot eat that.

Yes you can. Suppose a USD increased its purchasing power by one million times. What you have in your wallet would be enough to buy you what you needed for your entire lifetime.

The BOJ still talks about the need for price stability, to protect the yen. Some people never learn, especially central bankers.

You have the cause and effect mixed up. Japan never allowed its malinvestments to be liquidated and it is suffering the same fate as the US did during the 1930s. The same path is not open to the US because the USD is supported by an ever growing base of treasuries being issued by a bankrupt government. Eventually, this will matter. Of course, it does not have to matter today for us to make a good living. The decline of the US and the Fed have been a good source of income and wealth for me for more than a decade. There is no reason why the process can't continue for a while yet until the next bubble explodes.

The problem with having a fetish about money and gold etc. is that most investors are people. They want to make money, they want to borrow against assets, such as real estate.

It is not a fetish to believe in commodity money. It is certainly foolish to believe in fiat money. Your biggest error is to assume that the rest of the world is the same as the US when it comes to trusting fiat currencies. It isn't. Many of us non-Americans have seen currency devaluations, high inflation rates, or outright hyperinflation first hand. We are not as foolish as you seem to be and will hedge our holdings against the inevitable. That is why for many of us the housing crisis and the problem in the currency markets were not unexpected.

 
At 8/25/2010 1:51 PM, Blogger VangelV said...

Deflation crushes all that. Mild inflation, especially in real estate, helps investors.

I have been hearing the prophets of deflation predict it for decades. My experience has been that it makes more sense to bet against them than to believe their foolish positions that would have us believe that a bankrupt country can keep printing and printing yet avoid losing purchasing power for its currency.

The best US decade ever: The 1990s. Low inflation, federal surpluses, a surging Dow, huge employment growth, great economy.

Growth rates were low. Unfunded liabilities exploded. Taxes went up.

There was a bubble created thanks to the LTCM and Y2K nonsense. It only set up the 2000 crash and the subsequent housing bubble. The 1990s were not a decade of strength but one in which real wealth was bleeding out of the economy and the financial sector took a disproportionate share of the national income.

 
At 8/25/2010 1:57 PM, Blogger Benjamin said...

Vange:

Explain to me again why Milton Friedman thought the gold standard was stupid.

 
At 8/25/2010 2:01 PM, Blogger VangelV said...

Explain Japan, the strong yen, and the 1990s USA with a weak dollar.

First, look at the charts. The USD index did fine during the 1990s. The collapse took place in 1985, not in the 1990s. For your information, Clinton pursued a strong dollar policy and did not want the index to go down. He was successful.

Second, Japan was weak because its economy could not recover. Zombie corporations were the rule, not the exception. That made the banks and hedge funds eager to borrow the Yen at very low rates and buy Treasuries.

Be pragmatic. You gotta go with what works, and not worship at the gold altar.

I am. Gold has been used a money for thousands of years. The USD has lost 95% of its purchasing power since the Fed was created. I am the one who is practical and you are the one who is being foolish and going with what clearly does not work.

You buy asset classes after they have gone through a triple waterfall decline and the fundamentals support them. That means that gold has been the place to be since the late 1990s, which is why those of us who saw reality as it was have made excellent returns while the markets have taken a beating.

 
At 8/25/2010 4:20 PM, Blogger VangelV said...

Explain to me again why Milton Friedman thought the gold standard was stupid.

Because he did not understand gold. He predicted that it would fall to $16 an ounce when Nixon went off the gold standard because that was its value as a dental material. It went to $100 before it took off and overshot to an average price of $650 in 1980.

When it comes to Money the Chicago School is just as incompetent as the Keynesians.

 
At 8/25/2010 4:40 PM, Blogger Benjamin said...

Vange--

Okay then. The Chicago School, Friedman, Keynesians....all are dunderheads.
But you know the real score. And you are?

Did we have euphoric economic glory pre-paper money?

Has the near-constant growth in real per capita incomes in the Western World since WWII been an illusion?

And why a gold standard? Why not platinum? Palladium? The old Silver crowd? Diamonds?

 
At 8/25/2010 5:40 PM, Blogger Ron H. said...

"But you know the real score. And you are?

If I had to guess, I would say VangeIV is the reincarnation of one of these
guys.

You know, benji, he is taking the time to give you a hell of a good education here, and you aren't paying attention. Quit arguing & listen. Slowly reread and comprehend his comments on this thread. You could be better off for it.

 
At 8/25/2010 7:16 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 8/25/2010 7:19 PM, Blogger Ron H. said...

"Did we have euphoric economic glory pre-paper money?

Has the near-constant growth in real per capita incomes in the Western World since WWII been an illusion?
"

Benji, you are confusing money with wealth. The growth has been real, but that has little to do with the money supply.

As VangeIV pointed out, The USD has lost 95% of its purchasing power since the Fed was created. That means that by inflating the money supply, the government has spent 95 cents of every dollar without you knowing it. See it here.

This is the best argument for a gold standard. It would keep government from doing just what you recommend; to print money & drop it from airplanes.

BTW the Chicago school of economists including Friedman aren't all dunderheads, they have some good ideas except the one about the government controlling the money supply.

 
At 8/25/2010 8:26 PM, Blogger VangelV said...

Okay then. The Chicago School, Friedman, Keynesians....all are dunderheads.
But you know the real score. And you are?


The Austrian School. You know, the guys who predicted the crisis in the 1920s; who said that gold would explode when Nixon closed the gold window at the NY Fed; who argued that the LTCM crisis should have been allowed to run its course; who pointed out that adding massive amounts of liquidity to 'prevent' Y2K was creating a bubble in IT; who said that the Fed should not have added liquidity in 2001 because it was creating another massive bubble; who warned about housing and the subprime mortgage mess when everyone was cheering the bubble; who predicted that the Feddies would create a mess and would require massive bailouts; who pointed out that the stimulus package would not get employment levels down to what the Bush/Obama administration were claiming; who see gold and silver as a hedge against the bond bubble that you do not seem to see around you.

They are also the guys who point out that hyperinflation is not just an extension of inflation; that it is a loss of confidence in the fiat currency. Who pointed out that the weak economic period of the 1970s created a huge run for gold, silver, and commodities.

Did we have euphoric economic glory pre-paper money?

During the classical gold standard the world had a longer period of overall peace and the greatest period of growth in its history. Governments went off the gold standard so that they could finance World War I. That ended a period of more than 100 years during which the USD had gained purchasing power and began a period during which the USD (FRN actually) lost more than 95% of its purchasing power. And a period of conflicts that killed hundreds of millions of individuals and created some of the worst tyrants in history.

Has the near-constant growth in real per capita incomes in the Western World since WWII been an illusion?

Of course not. When you destroy the economic base you expect things to get better for a while. But that period could not match the same period during the 19th century, during which savers actually managed to gain purchasing power and real incomes rose much faster.

And why a gold standard? Why not platinum? Palladium? The old Silver crowd? Diamonds?

I am not arguing for a gold standard. I am arguing for a free market in money. What is chosen will come from the billions of choices made by individuals, not some central body run by special interests.

 
At 8/25/2010 10:45 PM, Blogger Benjamin said...

Vange-

Granted, things are crappy now. But"how have we destroyed our economic base" since WWII?

Our real economic base is not currency or gold, it factories, farms, infrastructure, human skills, and now the Internet.

Globally, all of these wonderful things are larger and better--we have fantastic factories and technologies, increased output every year from our farms, and improved infrastructures (including the web). Of course, better health care.

I would say this has been a golden age.

Tyrants? Please, the Spanish Inquisition was run on gold.

 
At 8/26/2010 1:29 AM, Blogger Ron H. said...

"...increased output every year from our farms, and improved infrastructures..."

Thanks to federal subsidies to rural areas.

 
At 8/26/2010 10:26 AM, Blogger Benjamin said...

Ron H.-

Touche.

(The e should have one of those little marks over it).

 
At 8/26/2010 12:13 PM, Blogger VangelV said...

Granted, things are crappy now. But"how have we destroyed our economic base" since WWII?

You need to read more carefully and understand economic history before you assume that I said something that I did not intend.

You asked, "Has the near-constant growth in real per capita incomes in the Western World since WWII been an illusion?"

I responded by noting, "When you destroy the economic base you expect things to get better for a while. This means that the economic base had been destroyed by the Great Depression and World War II, not that we destroyed it after the war ended.

Much of the growth was generated by two things. First, contrary to the predictions made by the Keynesians, the massive reduction of government spending was great for the economy. As debt was reduced and taxes were lowered, the size of the private sector, which is where wealth is generated, was increased. Second, the low base from which we started meant that even a modest amount of new investment would look very good. Third, the Marshall Plan showed why government needs to stay away from meddling. The nations that got the least amount of aid grew the fastest while those that got the most grew much slower.

Our real economic base is not currency or gold, it factories, farms, infrastructure, human skills, and now the Internet.

Gold is just money, the market's choice of the medium of exchange. Wealth comes from capital accumulation, which is exactly what Congress and the Bush/Obama administrations made so difficult.

The internet is the great leveler. I hear Chinese people talking about the effects of regime uncertainty and why following Keynesian prescriptions leads to ruin. I hear of poor people in Africa being able to access free engineering lectures at MIT and math courses in Yale. While the transfer of knowledge is great for foreign workers it requires that Americans sharpen their skills so that they can stay competitive.

 
At 8/26/2010 12:26 PM, Blogger VangelV said...

Globally, all of these wonderful things are larger and better--we have fantastic factories and technologies, increased output every year from our farms, and improved infrastructures (including the web). Of course, better health care.

You are right. People in the developing world are seeing their real standard of living explode in ways that they could not have imagined a generation ago. But American growth has not kept up. In fact, the American increase in the standard of living was paid for by depleting the savings of past generations and by taking on massive amounts of debts that can never be repaid.

I would say this has been a golden age.

Me too. My wife's relatives in China are living as well as the ruling class did one hundred years ago and some of them have accumulated enough wealth over the past decade to surpass more than 99% of the ruling class at the end of the Qing rule. I have friends with family members in India, Turkey, Eastern Europe, the Middle East, Russia, etc. Most are reporting a massive explosion in the standard of living in those areas.

But this thread is mainly about American prosperity and prospects. I would say that the US has fallen behind in many ways and is now in relative decline.

Tyrants? Please, the Spanish Inquisition was run on gold.

Please. The total number of victims during the Inquisition was less than the number of people who died during the first action at Somme. As I wrote before, you need to do some research. If you did you would know that under a gold standard governments have a hard time financing long wars.

 
At 8/26/2010 2:10 PM, Blogger Benjamin said...

Vange-

Well, at least we agree on that. Militaries everywhere should be starved of money.

Good luck out there. May you prosper.

 
At 8/26/2010 2:53 PM, Blogger Paul said...

Vangel,

Your commentary is excellent. Thanks!

 
At 8/26/2010 8:52 PM, Blogger juandos said...

Ditto Paul's comments Vangel, appreciate your insights sir...

 
At 8/26/2010 9:19 PM, Blogger VangelV said...

Ditto Paul's comments Vangel, appreciate your insights sir...

Any time. I have noticed that many commentators are finally beginning to speak out about the gross errors made by the corporatists on the left and right and that the case for more economic and social liberty is getting a hearing. While that may not do much good in the greater scheme of things, those that try to understand the issues and take steps to protect themselves can do quite well no matter what happens.

 

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