The Global Economy’s Remarkable Recovery
The CPB Netherlands Bureau for Economic Policy Analysis released its monthly report today on world trade and world industrial production for the month of February. Here are some of the highlights:
1. World trade volume increased in February for the seventh consecutive month, bringing global trade to a new all-time record high (see chart). This was also the third month in a row that world trade was above the previous peaks during early 2008 when the U.S. recession and financial crisis started spreading, causing world trade to drop by 20% in 2009.
2. World trade in February was 10.5% above its year-ago level, and marked the 14th consecutive month of double-digit annual growth starting in December of 2009. Compared to the cyclical high in April 2008, world trade volume has recovered to a level that is now 2 percent higher than its previous peak. Compared to the cyclical low in May 2009, global trade has increased by 28% through February of this year.
3. World industrial output was the same in February compared to January, but was above its year-ago level by 7.4%. World output in the first two months of 2011 established a new, all-time record high level, which is 5.2% above the previous cyclical high of 134.4 in March 2008 (see chart above). After falling by 12% during the global recession in 2008-2009, world output has increased by almost 20% during the last two years of a strong global rebound. Global output has increased in almost every month compared to the previous month during the worldwide recovery that started in 2009, with only one month of decline in industrial output in the last two years.
Bottom Line: Based on the ongoing and solid improvements in both international trade and world output, especially the fact that global trade and production are both at all-time historical highs, I think we can now say that the world economy has made a complete recovery from the financial crisis and global slowdown in 2008 and 2009. The remarkable recovery in the global economy over the last few years is a testament to the ability of markets to recover from even a severe financial crisis and the worst economic slowdown in generations. Even though there are still many uncertainties and headwinds moving forward, the strong world economic recovery so far is both remarkable and encouraging as we hopefully have entered a new period of global growth, expansion and prosperity.
10 Comments:
...I think we can now say that the world economy has made a complete recovery from the financial crisis and global slowdown in 2008 and 2009.
Perhaps. But the cost of that recovery to taxpayers and savers has been very high. It took trillions of liquidity to keep failing companies alive. While creditors, investors, workers, and managers of those companies have gained, their competitors and taxpayers have lost in a big way and the economy is weaker for it because it requires a continual injection of liquidity and the devaluation of fiat currencies to keep all the balls up in the air.
I wish the central bankers of the world would print even more money. Growth takes money.
What matters is the real economy--the factories, farms, roads, human capital. It is all still there. And output is grpwing, and has been since WWII rather nicely. It will continue.
We have to devise financial systems that do not collapse because jackanapes behind computer screens leverage up 100-to-1, ala Long-Term Capital Management.
Intelligent oversight of financial system is doable, for example, I largely trust a Volcker or Bernanke to know what to do.
The sole repository of knowledge may be lodged in Vange IV, but if Bernanke is half as smart as Vange IV, then he will succeed wildly!
I heard McDonalds, which received an exemption from "Obamacare," will hire 50,000 people in one day.
I also heard the long lines of people applying for minimum wage jobs at McDonalds looks like a modern version of the Great Depression's soup lines.
I also heard the long lines of people applying for minimum wage jobs at McDonalds looks like a modern version of the Great Depression's soup lines.
People lined up in the soup lines to get a handout. They are lining up now to get a job. There is a big difference.
VangelV, many people in those long lines who've never before considered working at a minimum wage job or at McDonalds is a big difference.
It's better than selling pencils. Afterall, it's the 21st century.
It seems harder for Americans to find a job than in the past three years. From McArticles:
McDonald's Corp said it was inundated with applications for some 50,000 newly posted jobs at its 14,000 U.S. restaurants (roughly three jobs per restaurant).
"It was positively overwhelming," said one McDonald's employee..."We knew national hiring day was going to be successful and prepared for lines of folks, and we were amazed by the turnout.
At the Candler Road store in Decatur, more than 100 people were lined up to apply for jobs by 7 a.m. and, two hours later, more than 300 already had applied for positions as crew members and managers.
"It's not even 9 a.m. and we've already had about 300 people come through," said Cheryl Dominique, who co-owns the Candler Road store with her husband, Yves.
"At one point, we had 120 people outside the door, but we were able to get all 120 interviewed," said Courtney Ristuben at her Citrus Heights location.
Halfway through her four-hour afternoon hiring session, from 2 p.m. to 6 p.m., Ristuben and her team had seen 300 job seekers. She anticipated another 300 by dinner time.
Peak
"It's better than selling pencils. Afterall, it's the 21st century."
What's a pencil?
Do you mean replacement styluses for your Nintendo DS or iPhone?
First, I am assuming that this is a US$ priced index. Since 2000 the US$ as measured by DX Index has decreased in value @40% with the decrease in value from 2008 to present @20%. I am not sure of the methodology CPB utilizes, but the recovery is hardly remarkable, and in fact shows how effective the government sponsored "Grand Illusion" is.
VangelV, many people in those long lines who've never before considered working at a minimum wage job or at McDonalds is a big difference.
There are times when illusions have to fade and reality has to be acknowledged. Given the current reality people have to do the best that they can. If they want hope then need to realize that there is nothing that can't be fixed by getting the government out of the way. Unfortunately for them, they voted for more meddling and are getting what they deserve.
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