One of the most important, but usually least talked about indicators that denotes the strength of the economy is the Baltic Dry Index (BDI). This is a measurement that tracks shipping costs and quantities and is a strong signal for whether trade and exports are rising, or in decline.
And a new study out on Aug. 28 by the World Trade Monitor has now validated the recessionary numbers of the BDI, and shows trade within the global economy is now down to levels not seen since the Great Recession period of 2009.
The first half of 2015 has seen the worst decline in world trade since the 2009 crisis, according to World Trade Monitor. The data could imply that globalization has reached its peak.
In the first quarter of 2015, the volume of world trade declined by 1.5 percent, while the second quarter saw a 0.5 percent contraction (1.1 percent growth in annual terms), which makes the first six months of the year the worst since the 2009 collapse.
Global trade won back two percent in June, but the authors of the research, the Netherlands Bureau for Economic Policy Analysis, warned that the monthly numbers were volatile and suggested looking at the long-term figures.
In addition to this new report, China’s recent slowdown in production and GDP also validates the massive decline in global trade since the Far Eastern economy is the world’s largest export nation, and relies primarily on trade to support their economy and large population.
With the drop in oil prices and other commodities being complimented by intense sanctions that have affected both Russia and the EU over the past year, global trade from all sectors of the economy has fallen to new recessionary lows. And if the volatility in the stock and bond markets these past two weeks are any indication, chances are very likely that the invisible hand of the market is overriding the manipulated figures that many nations in both the East and the West are trying to use to spin false optimism, and that the entire world has moved back into a recession just as strong as the one created out of the 2008 crisis.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.