Trade News: Global Economic Recovery; Rising Water Lifts all Ships But Storms Loom

From the Bureau of Economic Analysis, Department of Commerce. Gross Domestic Product: First Quarter 2011 (Third Estimate); Corporate Profits: First Quarter 2011 (Revised Estimate) Domestic profits of financial corporations decreased $66.3 billion in the first quarter, in contrast to an increase of $57.7 billion in the fourth.  Domestic profits of nonfinancial corporations increased $60.7 billion in the first quarter, in contrast to a decrease of $10.1 billion in the fourth.  In the first quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real value added increased.  The increase in unit profits reflected an increase in unit prices and a decrease in the unit labor costs. Unit non-labor costs were unchanged.  The rest-of-the-world component of profits increased $54.4 billion in the first quarter, in contrast to a decrease of $9.4 billion in the fourth.  These are good signs of recovery to be sure.  Notwithstanding, increased corporate profits are not being translated into increased wages.  No surprises there.   

From OECD: International trade statistics: trends in first quarter 2011 Merchandise trade continued to grow strongly across major economies in the first quarter of 2011. Total imports of G7 and BRICS countries grew by 11% in the first quarter compared to 8.2% in the previous quarter. Total exports grew by 8.5%, compared to 8.2% in the previous quarter. China’s trade surplus continued to fall in the first quarter of 2011 as import growth (8.4%) outpaced export growth (3.0%).  At US$18 billion, China’s trade surplus in the first quarter of 2011 was less than half that recorded in the fourth quarter of 2010, and significantly lower than the US$91.2 billion surplus recorded in the fourth quarter of 2008.  In the United States, the trade deficit increased to US$188 billion as import growth (11.5%) outpaced export growth (6.4%).  Download the PDF.

What does this mean?  A couple of things stand out. First of all, International Trade is continuing to rebound from the lows it experienced in the backwash of the Global meltdown. As the water continues to get higher, to the tune of several trillions of dollars of additional imports/exports, many boats will rise accordingly.  Secondly, every world merchant lusts for a share of the enormous China consumer market. Data indicates that the Great Dragon is reawakening and has a voracious appetite.  Good market opportunities await those who have prepared and patiently endured the economic storms.  

Recovery Doesn't Lift All Boats Equally

The official statement, from the White House, on the status of U.S. Economic Recovery, including a couple of items that may be pertinent to fortifying small business, creating jobs and expanding international trade:

• The President signed the American Recovery and Reinvestment Act, which has been responsible for about 3 million American jobs and brought the economy back from the brink of another depression.
• The President signed the Small Business Jobs Act providing  tax breaks and better access to credit for millions of small businesses.
• The President launched the National Export Initiative with a goal of doubling exports and supporting several million new jobs over five years.
• The President launched a $15 billion plan to boost lending to small businesses.
• The President played a lead role in G-20 Summit that produced a $1.1 trillion deal to combat the global financial crisis.