REED CONSTRUCTION DATA: TRADE GAINS AGAIN MASK DOMESTIC ECONOMIC DECLINE
Reed Construction Data’s Jim Haughey and a group of private economists foresee there is a possibility the recession may end in the second half of 2009.
Reed Construction Data Excerpt:
For eighteen months during 2007-08 soaring exports trimmed the US trade deficit, boosting GDP and masking the progressively weaker performance of the US domestic economy. This contributed to the shock at the 6.3% collapse in GDP growth at the end of last year when trade results briefly worsened. Now it is happening again in the first quarter of 2009. But this time the trade gains come from plunging imports. On April 29th, 1st quarter GDP growth will be announced to be about -4.5%. Excluding trade the decline in the domestic economy will be about -6.0%.
Do not misinterpret the announcement that the GDP decline slowed markedly during the winter. If your business is largely confined to the domestic US economy, the plunge in your market continued unabated during the winter. The recession will ease during the spring but did not during the winter. A turnaround in reported trade balance trends is likely during the spring. The slowing recession in the US will boost import and the much deeper recession abroad will trim exports.
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