The Journal fronts some interesting news this morning: Global trade is tanking, showing just how bad the U.S. economy is suffering and how much that will hurt all these hangers-on who depend on us to buy their stuff.
Overall U.S. trade is down 18 percent (good news for us, exports are falling more slowly than imports). Japan’s is down 27 percent. China’s is off 12 percent. Those are big numbers, but this really puts them in context:
While the growth of global trade generally slows during recessions, it doesn’t usually contract world-wide; the last time it did was 1982.
But this reminds me of an interesting point BusinessWeek‘s chief economist (who knew magazines had such a thing) Michael Mandel made the other day comparing China’s export-dependent situation to that of the U.S. in 1929.
Here’s one clue. If we look back at the Great Depression, we see that the U.S. was hit harder than virtually any other European or Asian country. For example, between 1929 and 1932, industrial production plunged by 45% in the U.S., compared to 41% in Germany, 26% in France, and 11% in Britain…
Why the disparity? There’s all sorts of reasons, relating to monetary policy and other factors. But in part, the U.S. was hit harder because it was a ‘trade surplus’ country—that is, a net exporter of goods. By contrast, Great Britain (for example) was running a sizable merchandise trade deficit in 1929, so cutbacks in spending would be felt more outside of Britain.
I think the press has done a good job so far keeping an eye on China.
I’m hopeful that will continue.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.