Wednesday, January 30, 2013

GDP Breakdown: Net Exports

It's been a while and I have put this off for long enough, but anyway, here is the final series of the GDP breakdown: net exports.  Net exports are defined as the imbalance in international trade: exports minus imports.
Imports (blue); exports (red); net exports (green).
Net exports as percent GDP. Net exports are negative so they take away from GDP.
Imports (red) and exports (blue) each as a percent GDP.
In the late 1980s, net exports began to contract.  This corresponds to the positive Saudi oil shock - when Saudi Arabia produced enough oil to cause a 40% drop in oil prices over a 3 month period.

As you may know, China is the largest source of imports in the US, and US oil imports account for the largest component of imports.  Because of the trade deficit, sooner or later, all those US dollars make their way to dollar denominated assets - either in Europe and eventually in the US.
These two factors, China imports and oil imports, account for the bulk of the US trade deficit.  Volatility in China, as Michael Pettis sees it, is confined to two scenarios: slow growth with high commodity prices, or fast growth with low commodity prices.  These scenarios will affect the US economy and its trade balance.  Inevitably, as Pettis states, protectionism becomes an issue.

1 comment:

  1. We are producing 100% cotton yarn of several counts ranging from 10/s up to 40/s for

    knitting and weaving.
    cotton yarn from


    cotton carded yarn exporter in