--- title: "Keeping it Real - Flexport Weekly Economic Report" description: "This week we delve into the importance of tracking real and not just nominal trade growth, observe continued trade price inflation, track consumer sentiment and spot a policy shift." language: en canonical: https://www.flex.thisisbrew.com/blog/keeping-it-real-flexport-weekly-economic-report/ lifecycle: live --- # Keeping it Real - Flexport Weekly Economic Report *Flexport’s Weekly Economic Report provides insights into key issues affecting global supply chains, international trade and the economy more broadly. This week we delve into the importance of tracking real and not just nominal trade growth, observe continued trade price inflation, track consumer sentiment and spot a policy shift.* ## In Focus - Real versus Nominal Trade Growth In [trade figures](https://www.bea.gov/sites/default/files/2022-03/trad0122.pdf) released this past week, nominal U.S. exports of goods and services fell by 1.7% from December to January while imports rose by 1.2%. On a year-over-year basis, nominal exports rose by 15.4% while imports rose by 21.0%. In times of high inflation, it is important to look at what is happening in real terms (adjusting for inflation) and compare it to nominal results. The real figures in the report refer to goods trade only (not services), so for a proper comparison: a 15.8% *nominal* increase in YOY goods **exports** corresponded to a 1.3% *real* increase; a 20.0% *nominal* increase in YOY goods imports corresponded to a 9.2% *real* increase. Sticking with the real comparison of January 2022 and January 2021, the biggest category movers for exports were consumer goods, up 15.4%, and Foods, Feeds & Beverages, down 15.7%. For imports, the biggest YOY real category movers were consumer goods, up 12.3%, and capital goods, up 12.0%. Following close behind were industrial supplies, up 9.3%, which includes petroleum and petroleum products. Petroleum and petroleum [products](https://fred.stlouisfed.org/graph/?g=MUit) make up a significant portion of U.S. trade – 8.7% of total exports and imports in 2021. The sector is drawing particular attention as oil prices [swing](https://www.reuters.com/business/energy/oil-prices-fall-continuing-downward-trend-last-week-2022-03-13/) dramatically amidst the conflict in Ukraine and sanctions on Russia. The graph above shows, in real terms, how U.S. petroleum trade has evolved in recent decades. While the U.S. remains a net importer, the gap between imports and exports has narrowed dramatically, almost closing at the onset of the pandemic. For petroleum alone (excluding products), the U.S. was a [net exporter](https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php) in 2020. One might ask why the U.S. both imports and exports petroleum. Why not just net it out? The answer lies in the differentiation within the category – there are differences between crude oil, for example, and refined gasoline or propane. Shipping [costs](https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php) and [regulations](https://rollcall.com/2022/03/08/us-shipping-rules-complicate-bid-to-ban-russian-oil-and-gas/) can also play a significant role. As a general rule, a country benefits when the price of goods for which it is a net exporter rises. This says nothing, though, about the distribution of those benefits. For those who are not oil producers, the high prices of oil for heating or of gasoline are an unmitigated pain. For our best, updated estimates of what will happen next for U.S. imports, see the updated [Trade Activity Forecast](https://www.flex.thisisbrew.com/blog/trade-activity-forecast/) to be released later this week. ## Economics Data The Flexport **Ocean Timeliness Indicator** for Transpacific Eastbound [routes](https://www.flexport.com/research/ocean-timeliness-indicator) increased by three days to 108 days. Flexport’s new **Air Timeliness Indicator** for TPEB [dipped](https://www.flex.thisisbrew.com/blog/air-timeliness-indicator/) to 12.7 days in the four weeks to March 13 versus the four weeks to March 7. **Consumer Price Index Keeps Rising** in [February](https://www.bls.gov/news.release/cpi.nr0.htm). The CPI was up 0.8% over January and 7.9% over the last 12 months. The biggest increases were for gasoline (up 6.6% in February), shelter, and food. The “core CPI” which excludes food and energy was up 6.4% over the last 12 months. Both annual inflation rates were the highest since 1982. - A University of Michigan consumer survey showed that [inflation expectations](https://www.reuters.com/business/us-consumer-sentiment-falls-early-march-inflation-worries-mount-2022-03-11/) for the next year rose to 5.4%, the highest since 1981. Expectations for inflation over the next 5 years stayed at 3.0%. **March Consumer Sentiment** Falls in the U of M measure. The figure for [current conditions](https://www.bloomberg.com/news/articles/2022-03-11/u-s-consumer-sentiment-sinks-as-inflation-expectations-soar?sref=ZdtLveG1) was the lowest since 2009, while the one for future expectations was the lowest since 2011. 54% of respondents saw their incomes lagging inflation. **U.S. Household Wealth Up in 2021** to $150.3 trillion, according to a [report](https://www.federalreserve.gov/releases/z1/dataviz/z1/balance_sheet/table/) by the Federal Reserve. The [increase](https://www.reuters.com/article/usa-economy-wealth-idCNS0N2UR03Y) was driven heavily by an increase in real estate holdings, up 15.5% from 2020:Q4 to 2021:Q4, equities, up 21.3%, and deposits, up 14.1%. Such expanded wealth can drive consumer spending, though a contraction can have the opposite effect. **Slow GDP Growth** in Europe. In the [Euro Area](https://ec.europa.eu/eurostat/documents/2995521/14358089/2-08032022-AP-EN.pdf/4aaa65b9-086c-28a1-7439-47886360bcb9?t=1646730719100), GDP was up 0.3% in Q4 and was up 4.6% over the same quarter in 2020. The quarterly GDP slowed from a 2.3% rate in Q3. U.K. GDP [rebounded](https://www.ons.gov.uk/economy/grossdomesticproductgdp) in January, up 0.8% after a 0.2% fall in December. **Chinese Producer Prices Rise** by [8.8%](https://www.reuters.com/world/china/chinas-feb-ppi-88-yy-cpi-09-yy-2022-03-09/) in the year to February. That was below the January rate of 9.1%. ## Politics & Regulations **European Central Bank Policy Shift.** The ECB [announced](https://www.wsj.com/articles/ecb-plans-to-phase-out-stimulus-sooner-than-expected-11646918078) that it would phase out its bond purchases sooner than anticipated and could raise interest rates later this year. The conflict in Ukraine means that the ECB may simultaneously have to deal with an economic slowdown and rising inflation. The [announcement](https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.mp220310~2d19f8ba60.en.html) seemed more focused on the latter. **MFN Withdrawal from Russia**. The Biden administration and G7 allies moved to end [Most Favored Nation](https://www.nytimes.com/2022/03/11/business/economy/russia-trade-status-us.html) status for Russia as a response to the conflict in Ukraine. The move would allow significantly higher tariffs on Russian products. **Disclaimer**: The contents of this report are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This report has been prepared to the best of our knowledge and research; however, the information presented herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report. --- *This is a markdown version of [https://www.flex.thisisbrew.com/blog/keeping-it-real-flexport-weekly-economic-report/](https://www.flex.thisisbrew.com/blog/keeping-it-real-flexport-weekly-economic-report/) for AI/LLM consumption.*