The US Fed and all the conventional economists say the chance of a US recession is in single digits. Then why is foreign trade imploding?
Newly-released data shows Chinese exports fell 25.4 percent during the month of February compared to a year ago while Chinese imports fell 13.8 percent compared to a year ago. For Chinese exports, that was the worst decline that we have seen since 2009 while Chinese imports have now fallen for 16 months in a row on a year-over-year basis.
China accounts for more global trade than any other nation (including the United States), so this is a major red flag. Anyone saying the global economy is in “good shape” is clearly not paying attention.
What does this have to do with a US recession, you might ask? The US is China’s largest export market. Exports to the US fell 23.1% year-over-year in February compared to -9.9% in January. Does this tell you something about the health of the US consumer? I think so. Anyone here own Walmart?
I don’t know how anyone can dismiss the importance of these numbers. As you can see above, this is not just a one month aberration. Chinese trade numbers have been declining for months and that decline appears to be accelerating. Donald Trump will tell you that China is manipulating its currency to increase its exports and take American jobs. Really? They don’t seem to be doing a very good job of it.