China Exports Most Deflation To The US Since December 2009
The December import price index report from the BLS showed a modest deterioration at the headline level: declining by 1.20% this was fractionally better than the expected decline of -1.40% however a notable drop from last month's -0.50%. While most of the December decrease was attributable to falling fuel prices, nonfuel prices continued to trend down as well, with Import prices ex-fuels dropping 0.3% (after falling 0.2% in Nov), suggesting the rest of the world continues to export substantial deflation to the US.
Annually, the pace of declines also picked up modestly dropping "only" -8.2% from a year ago, higher than the -9.5% slide in October. Import prices have now seen an annual decline for 17 consecutive months starting in July 2014. Fuel prices decreased 9.5 percent in December, following a 3.5-percent drop in November. The December decline was the largest 1-month fall in the index since a 12.7-percent decrease in August and was led by a 10.0-percent drop in petroleum prices. Natural gas prices also declined in December, falling 6.8 percent.
Before blaming only sliding commodity costs for the continuing collapse in import prices, read this: prices for nonfuel imports fell 0.3 percent in December and have not recorded a monthly advance since the index rose 0.1 percent in July 2014. Lower prices for nonfuel industrial supplies and materials; foods, feeds, and beverages; and each of the major finished goods categories all contributed to the overall drop in nonfuel prices. The price index for nonfuel imports declined 3.4 percent over the past year, the biggest calendar-year drop since the index was first published in 2001.
And while the trend of US trade partners exporting deflation either across the Atlantic or Pacific continues, one name continues to stand out.
China.
As the BLS reported, the price index for imports from China edged down 0.1 percent in December and has not recorded a monthly increase since the index rose 0.1 percent in December 2014. Import prices from China declined 1.7 percent in 2015, the largest calendar-year decrease since the index fell 1.8 percent in 2009.
In other words, just like in the aftermath of the Global Financial Crisis, China has found the perfect escape valve for its unprecedented excess production (now that its own economy can't fit it in) - dump it in the US.
Nowhere is this more visible than in the following chart showing the Chinese import price index dropping by 1.7% Y/Y, the most since December 2009.
Expect China to continue flooding the US with deflation especially since as we showed before, there is only one thing it can do with all that excess production of aluminum, steel and all other commodities: export it to whoever will buy it at (or below) dumping prices.
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"China exports..." so our monetary policy has nothing to do with it?
I agree with the implication of your question. This is another result rather than a root cause which is demand destruction. Among the larger root causes being the dilution of our currency and socialized currency (taken from 'haves' and made 'free' for public use i.e. zero interest by the force of government).
More bad news for American workers. Trump is right about China.
trump
believes healthcare is a birthright
voted for obama in 2008
still accepts the bailouts as a good idea
like taxing the rich policies , progressive income taxes
why is Trump citing a well-known liberal law professor & Hillary supporter to justify his birther charge on Cruz
How many hotel deals does Trump have with Russia and what part of that will play into his dealings with them
So support Hillary then, that'll be better.
If the only choices given to you are shitty ones, why make one?
Exercise your right to NOT choose.
pods
1) Those are not your only choices.
2) Not exercising your right is a vote for "either one is fine with me".
3) We are probably moving headlong towards a civil war but I think we should fully exhaust all other peaceful options before entertaining that idea.
Ha so you option is a progressive (trump) vs a progressive(Hillary)
You are foolish and part of the problem
Have a nice day
Neither are progressive. You're just developmentally challenged in the cerebral portion of your anatomy.
Hillary calls herself a progressive. Trump supports or has supportd everything she supports and said she would be a great presient. Wipe you lip. Donnie left some trump glaze there
I can call myself a widow of a multi-billion-dollar oil magnate, but it doesn't make me one.
Hillary and Trump are as progressive as you are intelligent.
Progressive, regressive, really, what difference does it make?
Hillary supports unlimited immigration, legal, illegal, no difference
Trump does NOT support immigration/refugee programs.
This is why Trump is getting so much support. I even support the man even though I find him despiccable. Why? Because of his immigration stance.
Welcome to the Liar's Club surf0766. You would make a GREAT politician. Or are you running currently for an office?
Fiorina has the same stance as Trump on immigration, just the ability to speak rationally and with decorum instead of arrogant bluster. Most of the Republican candidates take the issue seriously. NONE of them are likely to do a damn thing about any of it, so think about the REST of Trump and whether or not our country can survive another 4 or 8 years of the same as we've had, because he is ten times worse than the current prez in narcissim, petulance, arrogance and Socialistic tendancies.
I would like to ask you all - very kindly - to keep politics to the politics articles
it's just a suggestion, mind
Anyone almost but Bush.
Acutally Rand is the best candidate who isn't a warmongering, central bank loving, sycophant. But hey, vote your conscience.
The vice versa is the US exports inflation. Love those higher prices?
Exactly. And that's what Trump's position will bring, something he either doesn't understand (likely) or doesn't want to mention. It would take at least ten years to retool this country to produce the goods that China now produces. Trump's currency comments and tariff threats won't do anything to bring back those factories, but it sure will increase prices for Americans!
Just what we need, moar even cheaper Chinese trinkets. So long to the rest of the U.S manufacturing base.
Apparel is getting cheaper then ever ... much less then 10% of list price. With postal rates going up and items plunging in prices, there's nothing left to profit margins... I bet lots more retail stores esp online will drop off the map.
Moar dead bodies to add to the "Jobless Recovery"
What's with the "moar" by multiple posters? Is there some code language going on?
And, by the way....a good old free market cleansing of businesses will do this country good.
Consumers wouldn't be able to afford US manufactured goods. Their cheap trinkets keep the masses from waking up to what their "leaders" and The Fed have done to their money.
C/P:
{
Scottish Bank: "Sell Everything"
Washington Times January 11, 2016
The Royal Bank of Scotland has warned clients to sell everything, anticipating a cataclysmic year for markets.
Sell everything except high quality bonds, the bank's credit chief, Andrew Roberts, said in a note to clients this week. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.
The note said the current situation was reminiscent of the 2008 collapse of Lehman Brothers, which led to the global financial crisis. This time China could be the crisis point, The Guardian reported.}
Good Luck HUMANS!..
Would need a few credible links to believe this.
LOL!!!! Are we to believe that they are actually keeping the inflation then?
That's some funny shit right there...
Hundreds of trillions in "stimulus", QE, and ongoing ZIRP/NIRP and people still believe that all those paper claims will never start seeking out REAL assets...
idiots...
Most of that qe found its home in only one asset.....RE around the world. With other nations opening their borders to allow Chinese, Russians, Nigerians, etc the flood of money out of their countries, most put it in one place buying every piece of RE esp residential globally.
Look at Cali, Vancouver, etc...foreigners price the locals out of the market with their foreign money much of which is from questionable sources btu no questions ever asked.
I met someone the other day from Malaysia who was complaining about the Chinese buying every house built there pushing prices up 400%!
It's been a hayday for realtors and bankers throughout the world.
Seems like all that money will eventually ripple into other assets also causing widespread inflation more then what we see now in only specific sectors---food, health insurance, etc.
Bullshit. Have a look at the derivatives market. Real estate ain't shit.
"And while the trend of US trade partners exporting deflation either across the Atlantic or Pacific continues, one name continues to stand out. China. "
do I sense a bit of "the ECB ought to print even moar" in the latest ZH editorials?
the eur-printing presses are already white-hot, and Draghi's jawbone had to be surgically reinforced with titanium braces. there are limits, you know?
fact is that we left a a world behind where there was only one tail wagging all dogs. this game used to hurt everybody except that one tail
(there comes my point again that the stock markets aren't part of the ECB strategy, but I doubt anybody appreciates it, or that it can be proved empirically)
It is Possible that, all this is just a big” DISTRACTION”… orchestrated by the Big Reptilian News Corporation to camouflage what’s really going on right now.
With the FINANCIAL Terrorist been hunted Right now...Psychopath (Reptilian Instruments) making us believes that all is coming down and will be PEACE...
Here is a hint for you:
{ http://bit.ly/1TPQQAr }
Humanity is in trouble!
How Psychopaths operate and how to deal with them.
So if god dumps food and other goods from the sky for free, it's utopia and all would praise him, but if China dumps goods practically free they are cunts and should be bombed. WTF logic is that.
Answer: American logic.
Exporting deflation means they are importing inflation. Thanks, China!
Exactly. Just like Canada with it's skyrocketing food prices from USA imports. However....China doesn't import much from us because it's just us over there producing all the stuff and shipping it here, anyway. Thus the trade imbalance and the need to fiddle with the currency. If China doesn't buy anything from us, it needs to do something with all those dollars. They don't even want our Treasuries anymore, so they're uying American businesses and real estate. And GOLD.
Think Apple..their cost of goods just dropped 20%...so when do they drop the price of theri toys......Not....Tim Cook loves money....and he wants more of it....Liberal Greed is good...Consertative greed is bad
First: "ex-fuel" doesn't exist. Nothing is produced with out fuel as a major input.
Second: If we want to keep trading digital fiat for real goods, then we should be begging China to keep it up. Keep in mind that our largest employer simply unloads crates from China and puts plastic shit on the shelves. If you want China to stop currency manipulation, you're really asking them to pull the plug on the world's economy.
BTW: I'm ready for the plug to be pulled.
Correct, start thinking in terms of calories. In particular, you need CONSUMABLE CALORIES and useful chemicals (Oil has BOTH) if you actually want to do or produce anything of real value.
^ Truth
C/P:
{
China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the Goldilocks love-in of the last two years, Mr. Roberts said.
He said European and U.S. markets could fall by 10 to 20 percent.
Analysts at JP Morgan have also advised clients to sell stocks on any bounce, and Standard Chartered has predicted a slide in oil prices to as low as $10, The Guardian reported.}
¡SUERTE Humanos!
¡Es increíble!
Sharing is Caring! lol
If China wants to give us consumer products in exchange for pieces of paper, that's nice for the US. Obviously at some point it harms our manufacturing, but it doesn't seem that way at the moment. My question is: right now they are giving us their products and reducing their holdings of IOUs. How is this possible? As part of the AIIB are they giving Treasurys to other countries? Are they investing back in the US? I haven't seen it.
Deflation (lower prices) is good - when all can buy more with our wages.
The only problem is that houses keep going up in price so wage earners are worse off.
The banksters are causing this.