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Richmans' Trade and Taxes Blog
November trade report suggests that a worldwide recession is starting
On Wednesday, the Bureau of Economic Analysis released the trade report for November 2014. The good news is that the U.S. trade deficit went down, despite the high flying dollar. The bad news is that the report shows a decline in investment spending in the world as a whole and in the United States in particular. It could be that the world and the United States are going into a recession at the moment.
Specifically, according to the BEA's press release, U.S. capital goods exports decreased $1.9 billion, suggesting that foreign countries were buying fewer U.S. capital goods. Meanwhile, imports of industrial supplies and materials, not including oil, into the United States decreased $1.7 billion.
Declining investment spending typically causes recessions. In isolation, it could be considered an aberration. But taken together with falling oil prices, falling stock market prices, and falling commodity prices, it is possible that the world economy, in general, and the United States economy, in particular, may be about to go into recession.
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