We marked the end of the year-long microrecession in the United States yesterday, so today, we thought we'd check in on two of the lagging indicators of a nation's economic health: trade and jobs.
Our first chart shows how the year-over-year growth rate in the value of goods between the United States and China has been recorded by the U.S. Census Bureau for each month from January 1986 through July 2013. To account for changing currency exchange rates between the two nations, we have adjusted the values so that they are expressed in terms of the "receiving" nation's currency, with the growth rate of U.S. exports to China being based on the value of those goods expressed in yuan, and the growth rate of U.S. imports from China being based on the value of those goods expressed in U.S. dollars:
We find that both nations would appear to be have been experiencing sluggish rates of growth for the last several months. Looking just at July 2013, China's economy would appear to have fallen into recessionary territory for the third time since March 2013, as the pace of economic growth within that nation would not appear sufficient to increase its demand for the goods it imports from the U.S. Likewise, the pace at which the U.S. imports goods from China also indicates sluggish economic growth, although this month, it is in positive territory.
The sluggish growth rates observed in the past several months is not surprising given that the U.S. has only just exited a period of microrecession in August 2013, while China's economy has slowed to a very lackluster pace of growth. Since the decisions of what volume of goods to ship overseas is made many months in advance of their arrival at their destination nation's ports, which depends upon the business conditions observed at the time the decisions are made, what these growth rates are communicating are the economic conditions that existed in the respective nations several months ago.
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