Sunday, January 23, 2011

World Industrial Output is Above Pre-Recession Level and International Trade Is Not Far Behind

The chart above is based on data from the World Trade Monitor (CPB Netherlands Bureau for Economic Policy Analysis) and shows monthly World Industrial Production and World Trade from January 1991 to November 2011.  As the chart shows, global output has made a complete recovery from the sharp decline of 12% from March 2008 to February 2009, and output is now almost 3% above the March 2008 peak.  Global trade suffered an even-greater 20% drop over approximately the same period, from April 2008 to February 2009.  There has since been a 24% recovery in international trade, but it's still about 1% below the April 2008 peak.   

Bottom Line: Within the next few months, we can expect global trade to reach its pre-recession level, and then both global output and global trade will have experienced a complete recovery from the Great Recession. 

5 Comments:

At 1/23/2011 12:22 PM, Blogger VangelV said...

This is wonderful news but known to those of us who invest globally and provide products to global markets. But this development does bring to light a possible problem for the US economy. As the rest of the world recovers faster the dependence on the US lessens and countries become more confident about the need to plan for a world where the USD is not the primary reserve currency and where Americans no longer have the purchasing power to bid for the same volume of scarce resources such as food and oil as they used to.

The muni market will tell us what we need to know. If we see the declines accelerate to the downside once again we could be coming to an interesting inflection point that takes us to totally different territory.

 
At 1/23/2011 1:09 PM, Blogger Bill said...

The fact that the world at large has recovered faster than the US is clear evidence of the headwinds created by the Obama administration.

 
At 1/23/2011 1:28 PM, Blogger VangelV said...

The fact that the world at large has recovered faster than the US is clear evidence of the headwinds created by the Obama administration.

While I think that Obama is on his way to becoming one of the worst presidents ever he cannot take the blame for the mess that the US found itself in. It was the Fed that was blowing bubbles for the past three decades and Congress and administrations for both sides that cheered those bubbles on.

I blame the voters and the system. Neither are capable of making things work as they should because neither will get out of the way and let the markets work as they should.

 
At 1/23/2011 3:07 PM, Blogger Benjamin said...

Vange-

A cheap dollar is good for America. We can export goods and services, and we can hope to sell US assets to foreigner for big money.

Interestingly enough, the dollar has collapsed twice in recent history, once during Reagan's second term, and then during Bush jr's terms. But each collapse was followed by surge in exports. Exports take years to gin up--overseas salepeople, distribution etc.

Actually, I see a continuation of the ongoing global boom we saw before the Great Bush Recession. The only people left in poverty in another 20 years will be those people without work cultures, or living in repressive, non-market economies.

Basically, Africa and Islamica, with a few outliers, like Burma and North Korea.

We are entering a Global Golden Age now--sans a gold standard, but hey, you can't have everything.

 
At 2/15/2011 7:28 PM, Blogger VangelV said...

A cheap dollar is good for America. We can export goods and services, and we can hope to sell US assets to foreigner for big money.

A cheap dollar will cause the price of goods to increase at a time when Americans are struggling to stay afloat. That will cause many jobs to disappear as the price of essentials will force consumers to cut back. While some producers will be better off their numbers are too small to matter when compared to consumers.

 

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