The continued slowdown in growth for world trade spells trouble for state exporters.
Through the third quarter, Washington’s merchandise exports totaled $55.7 billion, down almost 5 percent from the same period in 2016. The consequences of “America First” haven’t even kicked in — so blame the decline on a strong dollar, continued weakness in international trade and a 12 percent drop in airplane and aerospace parts exports from the state. The data are compiled by the research firm WISERtrade.
If the trend holds, Washington may turn in an even weaker year than 2016, whose $79.6 billion was off almost 8 percent compared with 2015. Interestingly, exports to China, our largest trading partner, were up more than 10 percent through September. Exports to Canada rose 9 percent, but sales to Japan declined almost 19 percent.
Washington did better than most — for all states, the average fall in exports through the third quarter was more than 6 percent.
World trade has struggled in the aftermath of the Great Recession, failing to recover the trend lines of growth seen in the 1990s and 2000s. China’s slowdown is cited as the biggest cause. A Federal Reserve report from late last year cited “weak demand concentrated in highly-traded products, a deceleration in the pace of trade liberalization, the slowing of cross-country supply chain formation, and ongoing changes in the structure of the Chinese economy.” In the case of the latter, Beijing is trying to move from an export-dependent economy to a more advanced consumer economy.
Incoming Fed Chairman Jay Powell gave a thoughtful speech on the subject this past November as a Fed governor. One of his points is that Asian economies may no longer be able to count on the export-driven model for growth. But a transition will take time. Doing that will require building demand (and that includes government investments in such fields as infrastructure, being done in China and Japan). And even then, given the “secular stagnation” of the recovery around the world, U.S. export growth will be hard-won.
In short, Washington exporters will continue to see headwinds.
Today’s Econ Haiku:
Break out the cigars
A digital Gilded Age
The net in a net