Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
June trade data showed a worldwide slowing of business investment
The June trade data, released August 11 by the BEA, showed both a slowing of worldwide business investment and an increased bleeding of U.S. prosperity by China. The slowing of business investment was evidenced by the fact that U.S. exports declined from May to June led by U.S. exports of capital goods and industrial supplies. Here is the key paragraph from the report:
Overall, the report showed declining US net exports (goods and services) from a negative $50.8 billion in May to a negative $53.1 billion in June (a negative $538 billion over the last 12 months). This bleeding of American prosperity was led by China. In fact, U.S. net exports of goods to China set a record low of a negative $287 billion over the most recent 12 months, as graphed below:
So is the world economy about to enter a double dip? I doubt it. The fall in U.S. capital goods sales in June indeed suggests that world investment growth slowed in June. But that could just mean slower world economic growth, not a flip from growth to recession.
Meanwhile, whether the world has economic growth or recession won't much affect the United States. The U.S. trade deficit worsened from January 2010 through May 2011 even though the world economy was booming and the U.S. was still depressed below its fourth quarter 2007 real GDP. The U.S. trade deficit worsened in June 2011 when world economic growth was slowing. The U.S. is locked in a trade-deficit caused depression and there are no signs, whatsoever, of any improvement in that area.
Journal of Economic Literature:
Atlantic Economic Journal: