Source: Bureau of Labor Statistics, USA.

The chart above shows the month-on-month net change in US nonfarm payroll employment, seasonally adjusted, during the January 2008 through April 2010 timeframe. The chart below shows monthly US BLS U-6* unemployment rate data, not seasonally adjusted, for the April 2009 through April 2010 timeframe.

The US economy, as shown above, added 290,000 net nonfarm payroll employees during April. This was a solid follow-up to the net addition of 230,000 such employees during March and it represents, in our view, a convincing turnaround after nearly two years of dismal US job creation.

United States of America
Unemployment Rate, US BLS "U-6"
Monthly
April 2009 through April 2010
%, Not Seasonally Adjusted

Source: Bureau of Labor Statistics, USA.

The broad U-6 rate of US unemployment, not seasonally adjusted, as shown above, fell 90 basis points to 16.6% in April versus 17.5% in March. LRP prefers to follow the non-adjusted U-6 data as being more representative of on-the-ground realities for US workers and their ability to make fixed monthly mortgage and auto loan payments, as well as their willingness to make new durables purchases and discretionary expenditures for travel, restaurants and other forms of entertainment and leisure.

* "U-6": Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job.  Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

Source: Eurostat.

Using Eurostat country codes, the chart above includes data for the ten largest economies, by 2010 E GDP and as a percent of total EU 2010 E GDP, in the EU 27: Austria (AT), Belgium (BE), France (FR), Germany (DE), Italy (IT), the Netherlands (NL), Poland (PL), Spain (ES), Sweden (SE) and the United Kingdom (UK).

The chart below provides a graduated analysis of the cumulative percent of total EU 27 GDP accounted for by the EU 27's ten largest economies. For instance, the EU's largest economy, Germany, accounts for 20.4% of total EU 27 GDP. Germany and France, the EU's two largest economies, account for a combined 36.9%.  The EU's three largest economies, Germany, France and the UK, generate more than half of the EU's total GDP.  And the ten largest economies among the EU 27 account for 87.4% of total EU 27 GDP. While German Chancellor Merkel has been emphatic regarding that country's reluctance to provide emergency funding to struggling EU economies such as Greece, economic reality is that the EU's largest economies have the most to lose from the instability in euro trading that might accompany an economic collapse among any of the EU's 27 member states.

Source: Eurostat.

Source: Census Bureau, USA.

The chart above shows the US balance of trade, monthly, for the February 2009 through February 2010 timeframe. The charts below track monthly US balance of trade data over the same timeframe for both goods and services.

Source: Census Bureau, USA.

As the data in the top chart shows, the US balance of trade was -US$39.7 billion in February 2010, down US$2.7 billion MoM and down US$13.2 billion YoY. In  dollar terms, as shown in the second and third charts, this decline was primarily attributable to a further erosion in the US's balance of trade in goods.

While China's refusal to allow the Yuan to trade freely is a factor in the persistent US trade deficit, that deficit is largely a function of the US economy's long-term structural shift away from manufacturing-based industries and towards service-based industries. While the US, as seen below, enjoys a persistent balance of trade surplus in services, services are unlikely to be exported in total value amounts competing with goods. In February 2010, US exports of goods were US$98.5 billion and exports of services were US$44.7 billion.

Source: Census Bureau, USA.

Source: Bureau of Labor Statistics, USA.

The chart above shows monthly US BLS U-6 unemployment data, seasonally adjusted, for the March 2009 through March 2010 timeframe. The chart below shows U-6 data for the same period, but not seasonally adjusted.

Seasonally-adjusted, the US BLS U-6 unemployment rate for March 2010 was 16.9%, up 10 basis points MoM versus the 16.8% reported for February 2010 and up 130 basis points YoY versus 15.6% in March 2009. Not seasonally adjusted, U-6 for March 2010 was 17.5%, down 40 basis points MoM versus 17.9% in February, but up 130 basis points YoY versus 16.2% in March 2009.

Source: Bureau of Labor Statistics, USA.

The extreme divergence, as noted by LRP, that emerged in January 2010 between seasonally-adjusted and non-adjusted U-6 data, continued to ease in March.

In the view of LRP, March non-adjusted U-6 unemployment data indicates that on-the-ground employment realities in the US improved modestly in that month. Supporting this view, BLS reports that 162,000 new non-farm jobs were created MoM in March. The US employment situation, however, remains volatile... The US Department of Labor has more recently reported that the number of new jobless claims is up 18,000 to 433,000 WoW, +4.3%.

Source: Ministry of Finance, Republic of India.

The chart above shows Indian imports from China (excluding Hong Kong) in billions of Indian Rupees. The chart below tracks Indian imports from China (excluding Hong Kong) as a percent of total Indian imports.

Indian imports from China have expanded sharply during the FY 1997 through FY 2009 period, particularly since FY 2001. During FY 1997 through FY 2009, Indian imports from China grew from Rs 26.9 billion to Rs 1,476.1 billion, a CAGR of 39.62%. During FY 2001 through FY 2009, those imports have increased from Rs 68.6 to Rs 1,476.1 billion, a CAGR of 46.76%. Notably, Indian imports from China in FY 2009 grew by Rs 384.9 billion, or 35.3%, despite that FY's overlap with the worst months of the global economic meltdown.

Source: Ministry of Finance, Republic of India.

Source: Ministry of Finance, Republic of India.

The chart above tracks Indian exports to China (excluding Hong Kong) in billions of Indian Rupees. The chart below shows Indian exports to China (excluding Hong Kong) as a percent of total Indian exports.

During the FY 1999 through FY 2008 trough-to-peak period, Indian exports to China jumped from Rs 18.0 billion, only 1.3% of total Indian exports, to Rs 436.0 billion, still only 6.6% of total exports. Indian exports to China, as a percent of total Indian exports, topped-out at 6.7% in FY 2005. The CAGR for Indian exports to China during the FY 1999 through FY 2008 timeframe was 42.52%.

In FY 2009, Indian exports to China dropped 2.1% YoY from Rs 436.0 billion to Rs 426.6 billion. But total Indian exports rose 28.2% YoY from Rs 6.6 trillion to Rs 8.4 trillion, causing the share of total Indian exports accounted for by China to drop 50 basis points from 6.6% in FY 2008 to 6.1% in FY 2009.

Source: Ministry of Finance, Republic of India.

Source: Ministry of Finance, Japan.

The chart above shows Japanese exports to China (excluding Hong Kong) in trillions of Japanese Yen, and the chart below shows Japanese exports to China (excluding Hong Kong) as a percent of total Japanese exports.

Among the three developed East Asian economic giants - Japan, South Korea and Taiwan - Japan has maintained the best balance in its geographic mix of exports during the economic rise of China... In 2009, these three countries shipped 18.9%, 23.9% and 26.6% of their exports to China, respectively.

Source: Ministry of Finance, Japan.

Source: Federal Reserve Board, USA.

The chart above shows US net national savings in billions of US dollars for select annual and quarterly periods, and the chart below shows US net national savings as a percent of US national income for the same timeframes.

On March 11, 2010, The US Federal Reserve released "Flow of Funds Accounts of the United States" which indicated that US net savings had dropped to -$485.2 billion in Q4:09. As a percent of US national income, net savings dropped to -3.9%, the lowest level recorded since The Great Depression of the 1930s.

Importantly, the national savings rate is typically a pro-cyclical data point, meaning that the rate generally rises as the economy expands and declines as the economy contracts.

Source: Federal Reserve Board, USA.

Source: Ministry of Finance, Japan.

The chart above tracks Japan's total monthly exports in trillions of Japanese Yen during January 2009 through January 2010. The chart below shows the year-on-year increment to monthly exports, also in trillions of Yen, for the same timeframe.

Japanese exports rose 40.8% YoY in January 2010, the most powerful monthly year-on-year increase on record. In value terms, January exports jumped ¥1.4 trillion YoY to ¥4.9 trillion. January exports to China increased ¥0.4 trillion YoY, or 79.9%, and China accounted for 28.7% of the ¥1.4 trillion YoY increment in total January exports.

Notably, Japan's year-on-year export performance in January 2010 reflected an easy YoY comparison... In January 2009, Japanese exports had hit their cyclical bottom at ¥3.4 trillion, down ¥2.9 trillion, or 45.7%, versus January 2008. Looking forward, the February 2010 YoY comparison will also be easy against ¥3.5 trillion of exports in February 2009. Prior to the global economic meltdown, the cyclical peak in Japanese exports was achieved in March 2008 at ¥7.7 trillion.

Source: Ministry of Finance, Japan.

Source: Bureau of Labor Statistics, USA.

The chart above shows monthly US BLS U-6* unemployment data, seasonally adjusted, for the February 2009 through February 2010 timeframe. The chart below shows U-6 data for the same period, but not seasonally adjusted.

The seasonally-adjusted US BLS U-6 unemployment rate for February 2010 was 16.8%, up 30 basis points MoM versus 16.5% in January 2010 and up 180 points YoY from 15.0% in February 2009. Without the seasonal adjustment, U-6 for February 2010 was 17.9%, down 10 basis points MoM versus 18.0% in January 2010 but up 190 basis points YoY against 16.0% in February 2009. The extreme divergence noted by LRP between seasonally-adjusted and non-adjusted January U-6 data, eased slightly in February. In the view of LRP, February U-6 unemployment data indicates that employment realities in the US remain little changed since January.

Source: Bureau of Labor Statistics, USA.

* "U-6": Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job.  Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

Source: General Statistics Office, SRV.

LRP Research Analyst Be Thi Thu Hai in Hanoi, Vietnam contributed to the analysis summarized above.

Source: General Statistics Office, SRV.

The chart above shows the US Dollar value of Vietnamese exports to the US in billions, and the chart below shows Vietnam's exports to the US as a percent of total Vietnamese exports.

Vietnam's exports to the US have expanded sharply over the past decade from just US$0.5 billion, or 4.4% of total Vietnamese exports, in 1999 to US$11.4 billion, or 20.8%, in 2009. The all-time peak in the value of Vietnamese exports to the US was US$11.9 billion in 2008. The CAGR for Vietnamese exports to the US was 42.22% during 1999 through 2008 and 36.71% for 1999 through 2009.

Its current trade relationship with the US is an attractive one for Vietnam, particularly in light of Vietnam's balance of trade, currency value and inflation challenges. Not only is the US Vietnam's largest export market by a wide margin - Japan is second largest, accounting for US$6.3 billion of Vietnamese exports in 2009 - but Vietnam also runs a significant trade surplus with the US. Vietnam's largest exports to the US are apparel, shoes and home furnishings.

Source: General Statistics Office, SRV.

LRP Research Analyst Be Thi Thu Hai in Hanoi, Vietnam contributed to the analysis summarized above.

Source: General Statistics Office, SRV.

The chart above shows the US Dollar value of Vietnamese exports to China (excluding Hong Kong) in billions. The chart below shows Vietnam's exports to China  (excluding Hong Kong) as a percent of total Vietnamese exports.

Vietnamese exports to China have grown over the past decade from US$0.7 billion in 1999 to US$4.9 billion in 2009, representing a CAGR of 21.48%. But the share of total Vietnamese exports accounted for by China has fluctuated in a 440 basis point range of 6.5% to 10.9% over the same timeframe.

This percent-of-total-exports data for Vietnam contrasts sharply with comparable data for South Korea and Taiwan. As indicated in recent LRP Data Focus posts, the percent of total South Korean and Taiwanese exports accounted for by China has risen dramatically over the past decade to 23.9% and 26.6%, respectively, in 2009.

The relative underrepresentation of China as a Vietnamese export market has become particularly pertinent in recent weeks as Vietnam's persistent trade deficit has had a crushing impact on the US Dollar value of the Vietnamese Dong.

Source: General Statistics Office, SRV.

LRP Research Analyst Be Thi Thu Hai in Hanoi, Vietnam contributed to the analysis summarized above.

Source: Bureau of Labor Statistics, USA.

The chart above shows monthly US BLS U-6* unemployment data, seasonally adjusted, for the January 2009 through January 2010 period. The chart below shows U-6 data for the same timeframe, but not seasonally adjusted.

The seasonally-adjusted US BLS U-6 unemployment rate for January 2010 was 16.5%, down 80 basis points MoM versus 17.3% in December 2009 and up 250 basis points YoY from 14.0% in January 2009. Removing the seasonal adjustment, the US BLS U-6 unemployment rate for January 2010 was 18.0%, up 90 basis points MoM versus 17.1% in December 2009 and up 360 basis points YoY from 14.4% in January 2009. The current divergence between seasonally-adjusted and non-adjusted U-6 data is, in the opinion of LRP, extreme.

Economic data that is not seasonally adjusted is typically more volatile over time, but usually provides an enhanced view of circumstances "on the ground" during a specific period or at a specific point in time. Accordingly, current U-6 unemployment data that is not seasonally adjusted provides a window into the real-time qualitative environment for US workers, whether employed or not, and their ability to make fixed monthly mortgage and auto loan payments, as well as their willingness to make new durables purchases and discretionary expenditures for travel, restaurants and other forms of entertainment and leisure.

Source: Bureau of Labor Statistics, USA.

* "U-6": Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job.  Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

Source: Bank of Korea, RoK; Korean Ministry of Knowledge Economy, RoK; The United Nations.

The chart above shows the US Dollar volume of South Korean exports to China in billions. The chart below shows South Korea's exports to China as a percent of total South Korean exports.

South Korean exports to China have expanded at a rapid pace, in both value and as a percent of total exports, since 2001. In that year, South Korea's exports to China were US$18.2 billion, or 12.1% of total South Korean exports. That dollar figure rose to a record US$91.4 billion in 2008, or 21.7% of total South Korean exports. A recession-induced decline of 5.1% to US$86.7 billion followed in 2009, but exports to China rose to a record 23.9% of total South Korean exports during that period.

These figures reflect a sharp reversal in the roles of the US and China in South Korean trade. In 2001, South Korean exports to the US were US$32.3 billion, or 23.4% of total South Korean exports. In 2009, South Korean exports to the US were US$37.7 billion, or just 10.4% of the total. South Korean exports to the US peaked at US$46.4 billion in 2008.

Source: Bank of Korea, RoK; Korean Ministry of Knowledge Economy, RoK; The United Nations.

LRP Research Analyst Kim Eun-Kyeong in Busan, Korea contributed to the analysis summarized above.

Source: Bureau of Foreign Trade, RoC.

The chart above shows the US Dollar volume of Taiwanese exports to China (excluding Hong Kong) in billions. The chart below shows Taiwan's exports to China (excluding Hong Kong) as a percent of total Taiwanese exports.

The value of Taiwanese exports to China has risen dramatically since 2001. In that year, Taiwan's exports to China were just US$4.9 billion, or 3.9% of total Taiwanese exports. That figure rose to a record US$66.9 billion by 2008, followed by a recession-induced decline of 18.9% to US$54.3 billion in 2009. Despite that 2009 decline in absolute dollars, the share of total Taiwanese exports shipped to China increased 40 basis points from 26.2% in 2008 to 26.6% in 2009.

Most recently, Taiwanese exports to China surged from a depressed US$2.8 billion in December 2008 to US$5.4 billion in December 2009, +46.9%. The share of total Taiwanese exports accounted for by China jumped from 20.2% in December 2008 to 27.1% in December 2009. 

Notably, Taiwanese exports to the US have dropped from US$28.1 billion in 2001 to US$23.6 billion in 2009.  (The peak during that timeframe was US$32.4 billion in 2006.) Over that same timeframe, the share of total Taiwanese exports accounted for by the US has dropped from 22.3% in 2001 to 11.6% in 2009.

Source: Bureau of Foreign Trade, RoC.

Source: China Association of Automobile Manufacturers.

The chart above tracks China's annual vehicle sales in unit terms, and the table below tracks that country's year-on-year increment to vehicle sales in unit terms.

Total vehicle sales in China reached 13.6 MM in 2009, an increase of 4.3 MM units, making that country the largest market in the world for vehicle sales. Given China's large population and low market saturation - more then 60% of all Chinese households still do not own a car - LRP expects that that country's status as the world's largest vehicle market will extend for decades.

In the US, 10.4 MM cars and light trucks were sold in 2009, the lowest level in 27 years and down 7.0 MM units from the 2001 peak of 17.4 MM.  LRP expects that US car and light truck sales will increase by 1.2 MM units to 11.6 MM units in 2010. (China's vehicle sales of 13.6 MM in 2009 include an estimated 650,000 heavy trucks.)

Source: China Association of Automobile Manufacturers.

Source: Energy Information Administration, USA (actuals); Laguna Research Partners (estimates).

Following significant setbacks due to terrorism and war, Iraq has been making impressive gains in crude oil production since 2003. The Iraq Oil Ministry's immediate goal is to boost production by 0.3 MM barrels per day (bbl/d) to 2.7 MM bbl/d by the end of 2010. LRP expects Iraq to exceed that goal and average at least 2.7 MM bbl/d for the entire year 2010. Iraq’s 10-year strategic plan for 2008-2017 set a goal of increasing crude oil production capacity by 1.5 MM bbl/d within 3-4 years, and by an additional 2.0 MM bbl/d to a total of 6.0 MM bbl/d within 10 years.

Iraq's domestic consumption of oil is just over 0.5 MM bb/d, so the opportunity for oil export revenue is substantial. This is particularly important given that Iraq currently has no credible internal taxation system and national debt is excessive. Iraq's Oil Ministry is in the process of awarding contracts to domestic and international companies for the rehabilitation of existing oil fields and oil distribution networks, and increased production. Recent developments, in the view of LRP, indicate that this process is accelerating.

Source: International Monetary Fund.

The chart above tracks Japan's net government debt as a % of GDP, and the chart below tracks Japan's gross government debt as a % of GDP. Gross debt minus corresponding financial assets equals net debt.

The collapse of the Japanese asset price bubble, starting in 1990, and sluggish economic growth are seen as the primary causes of these rising debt-to-GDP ratios.

Unlike most advanced economies, Japan has financed its growing government debt primarily from domestic sources. But rapid expansion in the absolute and relative sizes of Japan's 65-and-above population is likely, in the view of LRP, to cause a significant decline in the country's average savings rate and total savings pool, thus requiring a hike in the interest rates necessary to attract foreign capital to Japanese government debt. Rising interest rates, and the associated increased cost of servicing its substantial debt load, could sharply limit the Japanese government's ability to invest in 1) critical domestic infrastructure and 2) foreign government debt.

Source: International Monetary Fund.

*UK data is September 2009.
Source: Eurostat, EU.

Using Eurostat country codes, the chart above includes data for the nine largest economies, by 2009 E GDP, in the EU 27: Belgium (BE), France (FR), Germany (DE), Italy (IT), the Netherlands (NL), Poland (PL), Spain (ES), Sweden (SE) and the United Kingdom (UK).

The figures in the chart above are roughly comparable to the widely-quoted US BLS "U-3" unemployment rate defined as total unemployed, as a percent of the civilian labor force. BLS "U-3", the official unemployment rate of the US, was 10.0% in December 2009.

Eurostat produces harmonized unemployment rates for the EU, EU Member States, and the Euro Area. These rates are based on the definition recommended by the International Labour Organisation (ILO).

Source: Bureau of Labor Statistics, USA.

The US BLS "U-6" unemployment rate for December 2009 rose to 17.3%, up 10 basis points from 17.2% in November 2009 and up 360 basis points versus 13.7% in December 2008. 

"U-6": Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job.  Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

Source: National Statistics Office, UK; International Monetary Fund.

While the UK's national debt as a percent of nominal GDP stood at an estimated 55.2% at the end of FY 2009, the UK's debt level, relative to nominal GDP, is the lowest among G7 members.  In the opinion of Laguna Research Partners, it is the "quality" of the UK's national debt that is currently of particular concern.  In May 2009, Standard & Poor's cut its view of UK debt to "AAA negative" from "AAA stable".  That was the first such cut since S&P started analyzing UK public finances in 1978.

Source: Bank of England, UK; International Monetary Fund.

The UK's national debt as a percent of nominal GDP has risen sharply over the past decade, but it remains below notable historical peaks.  The starting point for our data set is FY 1692 when the ratio stood at just 5.6%.  Listed below are notable fiscal years and the primary drivers that created peak ratio values in those years.

1784: The Carnatic Wars in India, The Seven Years War, and the American War of Independence.
1807: The French Revolutionary Wars.
1819: The Napoleonic Wars.
1923: World War I and reconstruction.
1947: World War II and reconstruction.

The UK's national debt as a percent of nominal GDP remained at 100%-plus in every fiscal year during 1756 through 1859 and 1918 through 1961.

Source: Bureau of Labor Statistics, USA.

"U-6": Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job.  Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

Calculations: Laguna Research Partners.

Source: National Bureau of Statistics, PRC.

During 2009, China's annualized growth in real GDP has rebounded from the 6.1% rate reported for Q1:09.  Growth for the first nine months of 2009 is reported to have been 7.7%.  An informal survey of forecasts indicates that Q4:09 GDP growth should be an estimated 9.0%, implying full-year 2009 growth of approximately 8.0%.

Source: General Statistics Office, SRV (actuals); Laguna Research Partners (estimates).

Rapid economic expansion in Vietnam during 2000 through 2007, when GDP grew at an average annual rate of 7.5%, caused a huge inflow of foreign capital.  This, in turn, caused an acceleration in consumer price inflation that peaked at an annual rate of 28.0% in August 2008.

Laguna Research Partners estimates that Vietnam's consumer price inflation, reflecting the global economic meltdown and declines in food and energy prices, will be 7.0% to 8.0% for the full year 2009.  As economic activity accelerates, LRP projects that inflationary pressures will result in consumer price inflation of 9.0% to 11.0% in 2010.