World Trade Grinds Lower, Hits 2014 Levels

Volatile and ugly.

World trade in merchandise is a reflection of the global goods-producing economy. And it just can’t catch a break.

The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released the preliminary data of its Merchandise World Trade Monitor for July. The index fell 1.1% from June to 113.4, the lowest since May 2015 – a level it had first reached on the way up it in September 2014.

The chart shows that merchandise world trade isn’t falling off a cliff, as it had done during the financial crisis, when global supply chains suddenly froze up. But it’s on a slow volatile grind lower. And compared to the fanciful growth after the Financial Crisis, it looks outright dismal:


This time – after the big adjustment in values months ago – we have another statistical note. In this data release, the CPB shifted the base year of the series from 2005 to 2010, so the values of the entire index shifted down. Hopefully, the change made the series more representative of reality – because getting a good grip on reality these days is really hard, when entire data systems are carefully designed to conceal more than they reveal (such as the official inflation data).

The decline in trade was sharper in the emerging economies than the advanced economies. That makes sense: The US, on whose demand the health of the entire world economy seems to depend, experienced falling imports in July, according to the data.

Data point after data point document that the goods-based economy in the US is in trouble – manufacturing, wholesale, retail… nothing is firing on all or even most cylinders.

But the service-based economy is not doing all that badly. Its biggest sector – and the biggest sector overall in the US – healthcare, is doing quite well, actually.

Among the health-care companies in the S&P 500, revenues rose 5.2% in the second quarter, year over year, when revenues for all S&P 500 companies fell 3.1%. Revenues rose not because people are getting more health care; they rose because health care has been getting more expensive at a breath-taking pace for many years as the industry has been consolidating into oligopolies and as outrageous prices increases on pharmaceutical products regularly grace the headlines. These price increases work their way into higher insurance premiums – to the point where the sector, at nearly 18% of GDP, is now bleeding the rest of the economy.

For many consumers, there is simply not be a whole lot of money left to buy the things – the gadgets, food, apparel, or doodads – that make up demand for the goods producing sector.

In the US, on whose demand the rest of the world depends, the scenario for the goods-based economy is not rosy. And it shows up in freight volume. “Overall shipment volumes (and pricing) are persistently weak, with increased levels of volatility as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels.” Read… Recession Watch: US Freight Drops to Worst Level since 2010, “Excess of Capacity” Crushes Rates

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  34 comments for “World Trade Grinds Lower, Hits 2014 Levels

  1. David Calder says:

    Are the health care companies in the US doing well because of huge prices increases or are more people getting health care? Probably a rhetorical question because most people I know are waiting until holes develop before seeing a doctor..

    • Petunia says:

      Health care costs are through the roof. My husband recently got new glasses, the cheapest we could find that looked presentable were $250. I need them too but have to wait to have the money. I am writing this with $6 readers from Big Lots.

      • Sound of the Suburbs says:

        I was watching something the other day and he was saying glasses like that would be $5 in China, there is a lot of profit being made in the supply chain.

        He is lucky enough to be able to buy his glasses in China and save the difference – $245 dollars in your case.

      • DanR says:

        I did well a few years back with frameless eyeglasses that I bought online for $60 after getting a prescription. I haven’t looked at this lately but could be a good option.

      • bill says:

        I use, pretty cheap, there’s others like them.

      • Mr. Mushroom says:

        Try Zenni Optical.

      • Marty says:

        It’s not the supply chain, it’s Luxottica

        The conspiracy behind your glasses

        A friend in the industry says this is true.

    • Mehdi says:

      In reality we do not have health care in the US, we have an industrial complex geered to maximize profit on people’s illnesses. Health care is proactive with completely different end goals.
      Just like the FEDERAL RESERVE…a deliberate named to fool public, of who they are why. JFK tried to take back that insane arrangements and paid the price. So now there NO money for health care.
      Let see which color of the same two party (Red or Blue) American will elect and hope for real change to occur.

  2. Brian says:

    If you take australia as an example there are three classes the rich and I mean rich they don’t care about the price of health care then there are working class they pay thru the nose and some for health care and the massive benefits class they get everything for free

  3. Frederick says:

    Brian that sounds exactly the same as the US actually brother

  4. night-train says:

    I think the point of the article is that healthcare costs are increasing to ridiculous levels and have been for years. I am for any venture making profits if they are providing products or services for which there is a demand. Even subsidies for those bringing something to the market for the social well being of the population. But the sky is the limit profits for healthcare is morally reprehensible and unsustainable. Reformation of this industry is needed.

  5. NotSoSure says:

    I may be missing something, but the chart shows that sometime in 2015(?) it’s even lower than now and then it bounced back. So I am not quite buying this grinding lower thing yet. IMO, world trade seems to be quite resilient bouncing between 113 and 116.

    • Wolf Richter says:

      Look for lower highs and lower lows. The lower highs are in. The lower lows are not yet in. So if we get a big bounce in August, we’re back to stagnation. If August drops even a little, it’ll set a new lower low.

      • NotSoSure says:

        Oh I pretty much agree with you that we are not going to see a straight line down. What I was trying to say was that the trend’s not clear yet. There are lower lows, but the range of movement seems to be quite constrained i.e. between 113 and 115.5.

  6. Meme Imfurst says:

    Night-train “But the sky is the limit profits for healthcare is morally reprehensible and unsustainable. Reformation of this industry is needed.”

    Indeed but just who is going to change it? Obomba? The industry? Congress? When folks have a choice pay up or pay the tax fine, there is no choice. Anyone in the position to change anything is getting Tristar 100% coverage for free at taxpayers expense, and gets it for life.

    I don’t know anyone who has spare change to spend these days, with insurance and rents eating their hides. In fact most have gotten used to not spending and find that is OK. With that in mind, and the rather sour outlook for the future, I think Christmas is dead.

    • night-train says:

      Meme: I didn’t say I had the answers to healthcare reform. That’s not my job. I don’t think many who post here are happy with their healthcare situation. Perhaps I stated the obvious, but reform is needed. I refuse to believe that we can’t find a workable, affordable healthcare solution. If basic healthcare isn’t a human right, we are a failure as a nation that prides itself as being compassionate.

      • marty says:

        It’s not a human right. It’s a service and should be delivered like every other service should be–no gov’t involvement of any kind. That’s the only reform that would solve the medical care problem but it won’t happen. Meme is correct.

        • Timthetiny says:

          Eh, it’s a service that people have to pay for, that is completely opaque. When having a heart attack, or your child has bone cancer, severe auto wreck, you are completely at the mercy of the person charging for the service. You have no ability to comparison shop, make a good deal, or do anything else that helps a market function efficiently.

          Whether or not its a right or a service isn’t the point, when your life is on ransom, there is nothing you won’t pay, and companies know that. I can walk away from a new car, I can’t save my own life.

      • George says:


        In replying to you, Marty is right. Health care is a service.

        The best way to avoid spending a lot on this service is to be selective of everything you stuff in your “pie hole”. Eat wisely and, barring accidents, you can leave your share of health care for those who really need it. This is how to control costs in this realm. Our B asic A merican D iet is the foundation of so much excessive cost.

        For sure, there are other factors involved mostly of politics, political cronyism and drs not being educated about nutrition in med school.

        The bottom line is that health is our responsibility not the gov’t.

  7. Ptb says:

    Boomers getting into their age bracket for more health care needs coupled with cost increases seems to indicate that a perfect storm is approaching.

    • walter map says:

      It’s those darn millenials. They’re wasting so much on food and shelter and student loan debt they can’t con tribute more to health care profiteering.

      If everybody would become a wealthy entrepreneur like they’re supposed to there wouldn’t be a problem. Sheesh.

  8. walter map says:

    If you’re a corporatist who wants profits and bonuses, just have governments and central banks shovel subsidies and free money at you.

    No need to produce goods and services. That’s doing it the hard way. Retail customers are getting their paychecks squeezed and their credit maxed out, so what would be the point?

  9. Curious Cat says:

    Increases in health care costs are the result of the same phenomena that caused higher education costs to skyrocket. The people receiving the services demand the best, and those who are paying are not those receiving services. In the case of health care the payers are insurance companies and government health programs. In the case of higher education it’s parents and governments via educational assistance (G.I. benefits and the like) and student loans, the full cost of which recipients realize only far to late.

    This is a classic case of market failure. Who cares what the cost of goods or services are if they receive them without paying for them? And to make the process even more insidious whenever healthcare (or education) gets criticized for their costs they immediately cry “reducing cost would compromise quality”, which, of course, only they are qualified to measure. It’s depressing.

    Can it be the whole world is a scam?

    • walter map says:

      “Can it be the whole world is a scam?”

      A mutually supporting collection of scams, actually. If you look closely you’ll notice that the global economy does not really exist. My own piece of the action is rather smaller that it ought to be.

      Ah, for the good old days, back when we were all getting rich selling overpriced houses to each other with money borrowed from the Chinese. Then it all fell apart. I blame Putin. Or is it Obama? I forget.

    • marty says:

      How can it be “market failure” when there’s no real market? It’s a government intervention failure.

  10. Paulo says:

    The US Medical System needs reform, but to do so requires courage and a strength/resolve to fight the vested interests of the current corrupt stakeholders.

    In 1962, Saskatchewan introduced the first single payer system in Canada and their doctors immediately went on strike citing the same reasons doctors and health insurance companies do in the US, today. The doctors called it called it, (egads) Socialized Medicine and 90% pulled their services. The strike lasted 3 weeks.

    From Wiki: “The strike was a significant test for Medicare. Its failure allowed the program to continue and the Saskatchewan model was adopted throughout Canada within ten years.[4] The political divisions within the province aggravated by the strike contributed to the Lloyd’s government defeat in the 1964 provincial election.[5] However, even though the Saskatchewan Liberal Party of Ross Thatcher had opposed the plan, Medicare’s popularity was such that his government left it in place.”

    I know lots of Doctors in BC. They work very hard and usually do so under a personal corporation designation, and they may or may not be partners in their umbrella clinics. If they want/need hospital privileges, they must be part of Medi-Care and cannot privately bill patients. If they choose to opt out and run their own clinics, they can do so. There are a few specialized surgical clinics that do this, but….they cannot exercise admitting and follow-up services in our hospitals as taxpayers pay the costs of our public system and facilities. Every doctor that I know makes a very good salary with this arrangement, in excess of $300,000 per year, and much much more with a specialty. However, the costs to run their clinics are also part of their overhead. They are pretty efficient places to visit as a result.

    Say what you will, but every doctor I know either lives on oceanfront, or has a beautiful ridge-view home in the best part of our local city. And, when they retire they will receive a generous lifetime pension courtesy of the Govt system.

    So, why are Canada’s health outcomes better in almost every case and costs up to 30% cheaper than the US private system? The answer is that there is no middle-man insurance company taking a cut. Soon, our Country will have a national drug purchasing program to further reduce costs to the patient, although we pay far less for our drugs even today.

    I have used this anecdote before on the site, but here it is again. 5 years ago, on a routine physical my (newly arrived South African Doctor) suspected I might have cancer at age 56. I underwent a few tests and upon confirmation underwent surgery within 1 week of diagnosis. Surgery was performed by a specialist from a neighbouring city who works at two hospitals (and has his own clinic with a partner for follow-ups, etc). There was no cost to me, no user or deductible fees, no costs for pain medications or follow-up surveillance appointments with cancer specialists. After 5 years….(This Month)…I am declared cancer free and released from the surveillance program!!… 5 years early based on Doc’s recommendation. However, I am choosing to use my GP to book yearly marker blood tests for another 5 years for my own peace of mind.

    The bill I have paid has been done so with higher income taxes, and more for liquor. Our cigarette taxes are similar to US States, but since I don’t smoke it’s a wash. I have not minded paying my taxes because of this. My Province charges my single son $38.00/month for his medical coverage, and my wife and I pay $70.00 for the both of us. Some Provinces do not have a monthly charge for their plan.

    The drawbacks to our System are that non-life threatening surgeries are done so from a waiting list. If someone comes in for surgery, say a crash victim, you will get bumped out of your surgery slot. I was on a waiting list for knee surgery. Instead, I used re-hab and an exercise program to rebuild my supporting muscles and have since withdrawn my name because I am pain free now for years. (Partially torn ACL, and meniscus tear). So, the system works for our family quite well.

    If the US People want to fix their healthcare system, they must be prepared for a big big fight. Because the corporations have so much power and own Govt loyalties in the US, I don’t know if it is even possible. I do know Obama Care is an awful and pricey add-on for users. My niece’s family pays $7,000/year in premiums, and must pay an additional $10,000 in deductibles before their costs are covered. They live in WA State, just 250 miles from me. For healthcare, they might as well be on Mars.

    US citizens will be called names if they try to take back their health system and reign in corporations. There will be a concerted attack against organizers. And, many doctors will be afraid of change and will consider it an assault on their freedoms and right to practice medicine as they see fit, or believe they know best. All this has to be accomodated and addressed. It can be done. Carrots work better than sticks, and people….both patients and doctors, are already well thrashed by private insurance companies.

    • nick kelly says:

      I’m not sure which country you are from- I’m Canadian.
      There is no pension for doctors, apart from CPP, which might not apply if they are incorporated, don’t know and it doesn’t matter.
      The only way they would have a pension other than basic OAP and CPP, would be if they were actually employees of a government or other large corporate entity. If they are self employed there is no third- party pension because there is no third party.
      So they had better save while earning.

      A few months ago there was a news item about how ultra- low interest rates and/or losses in oil stocks had forced some doctors to delay retirement, or even return to practice after retiring.

      Every thing else I agree with.

  11. OutLookingIn says:

    “entire data systems are carefully designed to conceal more than they reveal (such as the official inflation data)”.

    I’am a fan of the movie ‘The Shawshank Redemption’.
    Whats that got to do with inflation you may ask? Consider;
    The $370,000 that Andy stole from the warden in 1966, adjusted for the “official” rate of inflation to 2015 is the equivalent of $2,755,846.56
    Folks, that’s 50 years ago! I would surmise the “unofficial” rate of inflation has been and is much higher.

    The USA ‘Department of Truth and Information’.
    In 1983 over 90 % of US media was owned by over 50 companies.
    In 2012 just over 90% of US media is owned by the “Big Six”.
    Comcast, Newscorp, Disney, Viacom, Time Warner, CBS
    George Orwell has been vindicated. The above “Big Six” form the;
    Ministry of Propaganda.

  12. Sound of the Suburbs says:

    The made up figures, this is why I come to your site as you are trying to work out what is really going on.

    The UK mainstream press, why bother?

    When they make up inflation and unemployment stats., who do they think they are fooling?

    Those lower down the scale see the reality in their day to day lives.

    I have come to the conclusion the elites are only fooling themselves, they read this stuff and think everything is fine. In their day to day lives everything is great, so how can anything be wrong?

  13. marty says:

    Clearly, we couldn’t get rich selling houses to each other. So we decided to get rich changing each other’s bed pans. It’ll work

  14. SlightofMind says:

    I have been in the health care business many years. Not that long ago, a hospital administrator was a congenial guy in a short sleeved dress shirt and skinny black tie who walked around his hospital checking on the satisfaction of his patients, his staff, and the doctors. If what he found was mostly contentment, he was doing his job.
    Not so anymore. The hospital administrator is gone. He has been replaced by a corporatist, a true CEO. He rarely leaves his office. You can request to see him. Patients are portals to insurance and government dollars. Doctors and staff are commodities that have to be managed in the expense portion of the budget. Success is 4 new additions to the hospital in the last 5 years, and a six or seven figure bonus.
    The CEO corporatist in our small town local hospital has an office suite that would make Mr. Gates envious. He has a closed circuit video system that shows him any approaching visitor, and then a button on his desk that automatically closes his office door. His assistant is alerted that he is unavailable . Probably just took a call from the builder of his beach vacation home.
    Yes, the system is broken. Not by the doctors and the nurses who still take care of your ills. It’s broken because the “service” is now a for profit business. The advertising agency plasters “We Care” all over the media, the end of that incomplete sentence is finished in the CEO suite,”about profit.”

  15. Gerold says:

    Silly question, but what does health care have to do with world trade?

    • Wolf Richter says:

      When consumer resources are eaten up by health care, as they are in the US, consumers don’t have enough money left to spend on other products. So imports of consumer products are weak. US companies too feel the pinch (declining sales in the US since 2014) from lackluster consumer spending outside of health care. And so on. When health care “eats” around 18% of GDP in the US, that’s what this means. Similar situation is playing out in other countries, though to a lesser extent.

      As a result, trade in goods takes a hit.

      • Gerold says:

        18%? Wow! Being a Canadian coddled with ‘universal healthcare’ I had no idea healthcare costs in the U.S. were so high.
        It’s no wonder logistics takes a hit when discretionary spending is significantly reduced. No doubt Obamacare added to the pain.
        Thanks, for the insight, Wolf.

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