Addicted to The Mall Economy
As this chart shows, almost every major country is experiencing an upturn in export volume, except the U.S.. The news yesterday that retail back-to-school sales were down spooked investors.
Halfway through the back-to-school shopping season, retail professionals are predicting the worst performance for stores in more than a decade, yet another sign that consumers are clinging to every dollar.
The strength of the German and French economic recovery has got to be puzzling the Laissez-Faire economics crowd. As Stratfor points out, the reason is simple. Consumer spending accounts for only 18% of German GDP (as opposed to 72% of U.S. GDP) and Exports account for 46% of German GDP. So in the U.S. the sudden incidence of consumer thrift is a huge problem, whereas in Germany it is not. As I pointed out last month, until we revive our export business and lessen our dependence on the Mall Economy we are in for a ton of hurt. Forty years of Chamber of Commerce cheerleading for globalization and outsourcing have hollowed out the American manufacturing economy. Unless we can quickly build a Green manufacturing capacity for Wind and Solar equipment, this recovery will be anemic and we will continue down to road towards the Sharecropper Society, Warren Buffett warned about.
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The big difference between the current downturn and previous ones is that - since about 1980 - the United States essentially exported financial services, which were reflected by the huge capital inflows into Wall St..
But the current crisis has discredited these services.
Theoretically we could export anything - astrological forecasts, four leave clovers, sludge, carrier pigeons, toy soldiers, grasshoppers, you name it - just so long as it would satisfy overseas demand.
The brutal truth is that - despite our "We're Number One! self-celebration - the United States cannot satisfy overseas demand. They're all so foreign, you know.
August 15, 2009 1:24 PM | Reply | Permalink
As this chart shows, almost every major country is experiencing an upturn in export volume, except the U.S.
Hmm.
United States +2.2%
France . . . . +1.0%
Japan . . . . . +1.1%
Taiwan . . . . -0.5%
August 15, 2009 1:52 PM | Reply | Permalink
Nice catch Ellen.
August 15, 2009 2:10 PM | Reply | Permalink
Looking at the year-to-date figures, there is only one country, Korea, which, at minus 19.9% is better than minus 20%.
Also, it would be very interesting to compare these charts with the imports for those same countries.
August 17, 2009 7:19 AM | Reply | Permalink
Something about those charts is completely inconsistent. The countries where the figures show an increase, the charts show a decrease. Where the figures show a huge increase, the charts show a small increase. Clearly the numbers are apples and the charts are oranges.
Just looking at the charts, what Jon posted is correct. But, looking at the monthly numbers, there doesn't seem to be any pattern at all. I suspect the monthly numbers are just month to month, while the charts are 12 month moving averages.
August 15, 2009 9:43 PM | Reply | Permalink
The monthly numbers are especially dependent on energy prices which are volatile. As much as I hate discounting them, they do skew short term data.
August 15, 2009 10:23 PM | Reply | Permalink
Anyone else notice that the figures for some countries are for June and for other countries they include July?
Apples and Oranges.
.
August 17, 2009 7:22 AM | Reply | Permalink
In a way, I am glad to see the "Back to School" sales off. Yes, kids need some basics before returning to school -- shoes, for instance -- but cutting back on the whole "makeover" and the whole new wardrobe may be a positive development.
Perhaps the next big spending bash will not be as it was for past Halloween, rather than buy a costume made in China -- why not be inventive and make your own?
How do you start a fad? What would happen if kids got into one that placed emphasis on low energy consumption, and domestic products?
August 16, 2009 4:31 AM | Reply | Permalink
"consumers are clinging to every dollar"
That mean you have a dollar to cling to. For us every penny goes to get rid of high interest credit cards. Maybe someone should ask them why there is nothing left to spend.
August 16, 2009 10:45 AM | Reply | Permalink
Steve:
Boo Hoo.
If you have nothing left to spend, it is because you have already spent it all.
Take responsibility for your spending habits and try living within your income. Learn to ignore commercials which tell you how much money you are "saving" by buying any particular product. You will always save more money by not buying that product.
Borrowing money to make purchases only produces less spending money in the future because a portion of your money must then go to pay off the debt and the interest. This will always result in less and less money available for you to spend and greater and greater income for your lender of choice (according to you - a credit card company).
Educate yourself concerning the way the American economy works and how you can get the most out of it and stop listening to all the commercials on how and why you need everything NOW.
.
August 17, 2009 7:15 AM | Reply | Permalink
China, Japan, Korea, Hong Kong, Indonesia, Thailand and the USA all last experienced an upturn in exports in October. For Singapore, the Philippines and Malaysia, it was September and for Taiwan August 2008. For 8 of those economies, the last two months (May-June) saw deeper declines than in the two months before that.
-29% (Japan, June) is a lot better than -37.2% (May), and -21.2% (China, June) is better than -26.3%, but those June numbers are still really ugly.
= = = = =
Remember, folk: EXports are a sign of economic health in someone else's economy. IMports are the indicator of health at home.
August 16, 2009 8:42 PM | Reply | Permalink
I don't see what the difference is between consumers here and consumers there. We're all living at the mall, wherever we live. As long as the world economy depends on endlessly increasing levels of consumption, we lose.
August 18, 2009 11:54 AM | Reply | Permalink
Before long, many will be living in the streets. Watch the recent video. Link at bottom from the Hammer Forum at UCLA.
The Great American Bank Robbery
William K. Black, the former litigation director of the Federal Home Loan Bank Board who investigated the Savings and Loan disaster of the 1980s, discusses the latest scandal in which a single bank, IndyMac, lost more money than was lost during the entire Savings and Loan crisis. He will examine the political failure behind this economic disaster, in which not only massive fraud has taken place, but a vast transfer of wealth from the poor and middle class continues as the federal government bails out the seemingly reckless, if not the criminal. Black teaches economics and law at the University of Missouri, Kansas City and is the author of The Best Way to Rob a Bank Is to Own One.
http://hammer.ucla.edu/programs/detail/program_id/222
August 18, 2009 5:23 PM | Reply | Permalink