U.S. Europe Econom ic & Trade Ties The Near-term Outlook The - - PowerPoint PPT Presentation
U.S. Europe Econom ic & Trade Ties The Near-term Outlook The 2012 International Propeller Club Convention New Orleans October 4,2012 William L. Ralph R.K. Johns & Associates Inc. For Todays Discussion Perspective on the
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The 2012 International Propeller Club Convention New Orleans October 4,2012
The Near-term Outlook
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How did w e get into this m ess?
Euro Zone (est. 1999, accounts for 30% of global GDP) financial & monetary targets were clear on paper, but often ignored or “bent” to allow the weaker countries to grow & trade (example: Greece joined in ‘01 and immediately missed (or hid) the fact that it was 30% above limits!)
2008 Housing bubble burst in the US & in Europe … big difference in bank rescue efforts – Europe stop gap effort required each country to pick up the tab as “sovereign debt” (at that time, US debt/GDP was 70% … Europe avg. was nearly the same but mask the risks (Italy 106%, Greece 118%) “Can spend if you collect taxes & have good credit” 2009 US economic recovery takes hold in 2nd half, American confidence rebounds 2010 US jobs show steady gains, upturn boosts value of the $, Greece & Ireland bank bailouts 2011 Portugal bailout, 2nd Greek bailout, Europe invests less in US (‐20% yoy), US money market funds exit Europe , Republicans take control of House of Rep., US exports to Europe are squeezed by strong currency & weakening economics (Eurozone accounted for 19% of US exports in the 90s, down to 13% last year) 2012 US recovery dragging but confidence O.K. , spending on autos & 1st signs of housing rebound better than job #s would predict, manufacturing still an engine of growth (although co. profits are mixed), politics is always the wildcard !!! Europe economy remains in recession – debt crisis likely under control, but consumers remain skeptical & manufacturing in 8‐month funk, weak Euro should help exports
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European Joblessness is a Real Problem w hen trying to im pose further austerity
“W e think it w ill be very hard for Europe to throw us out,”
Greece’s Left w ing political leader
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Last Year, only 3 European countries w ere in Recession … this Year I t’s 9 ! 2011 2012
All 4 are forecast to stay in recession thru ‘13 Big 3 are forecast to repeat ’12 slow growth in ’13 then see avg. gains by ‘14
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work hours signaling some strength
“month’s supply”)
high negative equity holdover)
consumer spending (frugal spending fatigue!)
below income growth
US real GDP forecast: 2012 2.2% 2013 2.1% 2014 2.7% “W e are Dialing Back Expectations for Am erica”
Wells Fargo Bank, Oct ‘12
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7 2 4 6 8 10 12 Oceania Africa Mid-East Carib EC S.Ame WC S.Ame India + Med
U.S. Container I m port Trend 2 0 1 1 By Trade Partner
Million TEU, Source: PIERS The Transatlantic w as the grow th w inner, w hich resulted in m ore services & ( relatively) bigger ships for that trade 2 0 1 2 : som e slow dow n due to econ. stagnation but still O.K. ( N. Eur + 8 % , Med + 9 % ) 2 0 1 3 : if autos & housing lead US m oderate recovery ( & $ stays strong) , w estbound trade grow th should repeat ‘1 2 or touch + 1 0 %
% Chg. '11 vs. '10 0.9% 10.6% 0.9% 10.1% 12.4% 2.3% 9.5% 0.1% 7.9% 5.4% 6.6%
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U.S. Container Export Trend 2 0 1 1 By Trade Partner
1 2 3 4 5 6 Oceania Africa WC S.Ame India + Med Mid-East EC S.Ame
Carib
% Chg. '11 vs. '10 8.3% 6.5% 4.2%
5.7% 6.4% 6.1% 1.7% 7.0% 7.0% 11.7% 5.8%
Med econ problem s already im pacted US exports last year 2 0 1 2 : currency pressure & Europe’s recession has pum m eled trade ( N Eur -6 % , Med -1 1 % ) 2 0 1 3 : Transatlantic eastbound volum es w ill likely rem ain flat, w ith a decent chance of upside grow th I F European biz confidence returns
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Bill Ralph
226 Chestnut St. Roselle Park NJ brrkja@aol.com 908‐245‐2181