Volatility of external demand | Ecobrowser

January 2023 Merchandise Export Preliminary Estimate released today. A big leap from the pre-pandemic past, but not from the recent past.

Picture 1: Seasonal seasonally adjusted monthly growth in U.S. merchandise exports (blue). Peak-to-trough dates as determined by the NBER are in grey. Source: Census via FRED, NBER and author’s calculations.

The standard deviation increases from 0.023 to 0.066 (2007M01-19M12, 20M01-23M01) Given the impact of the pandemic (as evidenced by the sharp drop in exports in 2022), it is possible that some of the volatility is due to perceived seasonal factors. . However, I suspect at least some of it is related to supply chain issues and fluctuating overseas demand.

A similar picture exists for imports.

Figure 2: Seasonally adjusted seasonally adjusted monthly growth in U.S. merchandise imports (blue). Peak-to-trough dates as determined by the NBER are in grey. Light blue indicates a hypothetical 2022H1 recession. Source: Census via FRED, NBER and author’s calculations.

The standard deviation increases from 0.026 to 0.043. Interestingly, although imports are declining in the second quarter of 2022, they do not come close to declining in either 2008 during the global financial crisis or 2020 during the pandemic. Of course, one must be careful in interpreting imports as entirely demand-driven, given supply chain constraints, including disruptions to production in China and elsewhere (a typical approach to estimating imports of goods to America in “normal” times is to assume that supply elastic).