Friday, February 21, 2014

US versus International Economic Developments

Former Chairman of the Goldman Sachs Global Asset Management division, Jim O'Neill, is puzzled by the continuing international obsession (amongst media outlets/analysts/economists) with US economic data despite dramatic changes in the global economic landscape:

“…back then the indicator [US non-farm payrolls] measured something that really mattered in global economic terms: the state of the U.S. labor market. These days, I wonder why anyone outside the U.S. pays that much attention.

... For the internationally focused, it's more of a puzzle. The world has changed. In the late 1990s, the U.S. accounted for almost 20 percent of world imports: Through that channel, changes in the U.S. directly affected the rest of the world -- and the U.S. labor-market data was crucial information. In 2013, U.S. goods imports were in the vicinity of $2.3 trillion. That's about 14 percent of U.S. gross domestic product and just more than 12 percent of world imports -- less than in the late 1990s.
China's imports now stand at a little less than $2 trillion, some 20 percent of GDP and roughly 10 percent of world imports. Since the recession, China's yearly imports have surged by more than $800 billion. Unless something remarkable happens, China will soon be world’s biggest importer -- as well as the world's biggest exporter, which it is already.”