Monday, May 23, 2011

World Trade and Output Have Fully Recovered

The CPB Netherlands Bureau for Economic Policy Analysis released its monthly report today on world trade and world industrial production for the month of March.  Here are some of the highlights:

1. World trade volume increased in March for the seventh consecutive month, bringing global trade to a new all-time record high (see chart).   This was also the fourth 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.  World trade is now 3.4% above the previous peak in April 2008.     

2. World trade in March was 8.4% above its year-ago level, and marked the 16th consecutive month of annual growth in trade starting in December of 2009.  Compared to the cyclical low in May 2009, global trade has increased by nearly 30% through March of this year. The CPB comments that "Trade momentum has been rising since November and remains strong. In the first quarter trade grew by 3.6% (non-annualized)."  From the first quarter of last year, trade volume has registered an impressive 10.2% gain for the first three months of this year.

3. World industrial output declined by 0.8% in March from February, following a slight increase of 0.10% in the previous month.  According to the CPB, the "March decline was caused by the disaster in Japan, where production plummeted by 14.9%," while growth in industrial output was positive in the United States, emerging Asia, and Latin America in March.  For the first quarter of 2011, world output increased by 7% on an annual basis compared to the first quarter last year.  Even with the Japan-related decline in March, world industrial output is 4.2% above the previous cyclical high three years ago in March 2008.

Bottom Line:  Though we still face many economic uncertainties moving forward, the strong economic recovery to date for world trade and world output is encouraging and hopeful.  The fact that both world trade and world output are now 3-4% above their early recession peaks is clear evidence that the world economy has fully recovered from the Great Recession and financial crisis of 2008. 


At 5/23/2011 10:07 AM, Blogger Buddy R Pacifico said...

From the report background memo:

"Monthly trade figures are volatile and focus on ‘momentum’ is therefore preferable. Trade momentum has been rising since November and remains strong."

Great news considering the econ chaos of the Japanese economy.

At 5/23/2011 10:49 AM, Blogger Benjamin Cole said...

Until QE2 expired, things looked good. Now, not so sure.

QE3 makes sense.

At 5/23/2011 11:01 AM, Blogger Buddy R Pacifico said...

"QE3 makes sense"

The good news on QE2 is that it created 700,000 jobs, The bad news is that each job cost $850,000. That is the assertion from the article "QE2 was a bust".

At 5/23/2011 11:03 AM, Blogger morganovich said...

"World trade in March was 8.4% above its year-ago level"

this is a nominal figure.

us imports were up in price over 11% and exports in the mid 10's.

much of the emerging world has inflation higher than this.

8.4% sounds like a lot of growth, but it's likely a contraction in real terms.

i'll bet you'd wipe out 1/3 of this growth just taking out oil...

At 5/23/2011 11:18 AM, Blogger James said...

World trade and output have recovered but US employment has not. Does that not argue for a return to an economy where we produced manufactured goods for ourselves and purchased only those raw materials we do not have? Our long history as a trade protected economy proves that we are capable of making almost all of what we need. Real wages of blue collar workers were higher in the past. That says the net impact of the lower prices consumers get from imports is eclipsed by lower wages. For all practical purposes that group of Americans who are consumers is the same group of Americans called workers. Why should we organize our economy to advantage trust fund babies to the detriment of the rest of us?

At 5/23/2011 11:20 AM, Blogger Benjamin Cole said...


Is your link active?

At 5/23/2011 11:27 AM, Blogger Buddy R Pacifico said...

Benjamin, et al, "QE2 was a bust".

At 5/23/2011 12:24 PM, Blogger morganovich said...

"Until QE2 expired, things looked good. Now, not so sure."

QE2 hasn't ended yet benji. that happens in june.

At 5/23/2011 12:26 PM, Blogger Benjamin Cole said...


Arends seems to ignore the real job growth and profit surge that we had going on under QE2. Exports surged too.

And what does Arends offer, except criticism? What is his policy? We wallow in perma-recession, ala Japan?

At 5/23/2011 2:04 PM, Blogger Larry G said...

did the current administration policies - contribute to this recovery ?

what "worked"?

what "failed"?

At 5/23/2011 4:33 PM, Blogger juandos said...

"did the current administration policies - contribute to this recovery ?"...

Due to the current administration there is no American recovery to speak of...


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