Year-over-year global trade growth, as measured in U.S. dollars, has turned negative for the first time in more than six years. While those predicting a recession have jumped on this bandwagon, a closer look at how Americans are spending money tells a different story.
This chart shows consumer spending is up a healthy 6.9% since the 2007 pre-recession levels, yet those dollars are being spent in different areas. Service activities are taking a larger bite out of wallets while some manufactured products have seen softness. This may benefit service providers such as insurers, health care equipment manufacturers and financial companies but could be a headwind for industries such as textile manufacturers and dry goods shipping. While we’d welcome an uptick in global trade, we believe without it, investors can still profit by following the spending.
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