Welcome to the California Trade Report, Beacon Economics’ monthly analysis of California’s international trade activity. This report analyzes data released by the U.S. Census Bureau’s Foreign Trade Division and pinpoints important trends in the state’s import/export industry, identifying potential effects on the state’s economy. The report is only a sampling of the kind of economic research and data analysis available from Beacon Economics.
CALIFORNIA EXPORTS DECLINE IN LATEST NUMBERS BUT DO BETTER THAN THE NATION AS A WHOLE
Although the nominal value of California’s merchandise export trade in July fell from one year earlier, the decline was not as great as that sustained by the nation as a whole, according to Beacon Economics’ analysis of U.S. trade statistics released this morning by the Foreign Trade Division of the U.S. Census Bureau.
The year’s seventh month saw California businesses export goods with a nominal value of $14.035 billion. That was down 8.2% from the $15.286 billion the state exported in the same month one year earlier. By comparison, overall U.S. exports were off by 9.1% from one year earlier.
Shipments abroad of manufactured goods from California slipped 8.8% to $9.021 billion from $9.895 billion in the previous July. Exports of agricultural products and raw materials dropped by 4.6% to $1.650 billion from $1.729 billion. Re-exports declined by 8.1% to $3.364 billion from $3.662 billion.
“We are seeing the impact of lower prices on a wide array of California’s exports,” said Jock O’Connell, Beacon Economics International Trade Advisor. “Almonds, for example, are the state’s most valuable agricultural export, and almond export tonnage is up about 10% over last year. But the prices growers are getting for their crops are about the lowest in a decade. Similarly, Tesla ships electric vehicles from a factory in Northern California, but stiff competition for global markets from Chinese electric vehicle manufacturers like BYD has been driving car prices down.”
“Prices of both imports and exports have been down over the last year,” said Christopher Thornberg, Founding Partner of Beacon Economics. “What we’re seeing is not a traditional negative in terms of trade shock, but rather the impact of global shipping markets finally catching up with the post-Covid demand surge.”
The real question for shippers thinking ahead, according to Thornberg, has to do with the impact of drought problems in Panama on global shipping patterns, not to mention the halting of grain shipments from Ukraine. “Global prices for shipped goods may well start to climb again,” said Thornberg.
California accounted for 8.8% of the $159.623 billion in U.S. merchandise exports in July, up slightly from its 8.7% share in July of last year. In pre-pandemic July 2019, California accounted for 10.2% of the nation’s merchandise exports.
Note: The U.S. Commerce Department has been publishing state-of-destination import statistics since 2008. Beacon Economics has long felt that state import data provide a highly misleading indication of the state in which imported goods were ultimately consumed. As a major gateway for the nation’s foreign trade, California has consistently been credited with an out-sized share of U.S. merchandise imports. However, we now believe that the process by which state-of-destination import statistics are compiled has become stable enough to be used to measure relative increases or decreases in the value of imported goods consumed or otherwise used by residents or businesses located in California. We strongly emphasize that we are solely interested in identifying trends. We continue to believe it is not useful to use state export and import statistics to calculate a state trade balance.
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