Exports and Imports
Trade is a big deal
Overall, trade has a net effect on total GDP that is pretty small - just a few percentage points. Since trade is made up of both exports (positive for GDP) and imports (negative for GDP), we can take a deeper dive on those components. Here is what it looks like when those two items are broken out:
A few things jump out here. First, that GDP, the big number it is, has a big mix going on under the surface with trade. A little over 10% in exports and a bit more than that in terms imports.
Next, looking at all those recessions, there isn’t clear behavior going on for imports and exports. In the last post, it was mentioned that the trade deficit typically shrinks during recession but what is interesting is that imports and exports as a portion of total GDP don’t act that straightforward here. Sometimes they shrink together and sometimes they grow together.
The last thing is the overall downtrend in the last several years. It might be easy to blame the trade war for the little blip at the end but generally trade on a nominal import and export basis has recently been a decreasing component of overall GDP. I don’t really have an opinion on this and don’t feel I’m qualified to say something here so I’ll just leave it at “isn’t that interesting?”
Next I’ll do a break out of the goods and services components of trade then, after that, move onto the last major component of GDP.
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