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Trade Response to Global Downturns

Trade Response to Global Downturns. Marney Cox Chief Economist SANDAG March 2010. US Trade Growth Outpacing GDP (Cumulative Growth Rate 1992-2008 current $). Global Recession’s Impact on Trade (findings from World Bank Report, August 2009). Elasticity of Trade Value to GDP is near 4.0

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Trade Response to Global Downturns

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  1. Trade Responseto Global Downturns Marney Cox Chief Economist SANDAG March 2010

  2. US Trade Growth Outpacing GDP(Cumulative Growth Rate 1992-2008 current $)

  3. Global Recession’s Impact on Trade(findings from World Bank Report, August 2009) • Elasticity of Trade Value to GDP is near 4.0 • Trade values fall more than volumes • Mean recovery time to previous peak 4 years • Impacts vary across industries • Least severe: consumer products—food and beverages • Most severe: durable commodities—iron and steel • Following crisis deficit or surplus conditions return

  4. USGDP-Measuring the Decline(Index Q-O-Q Change from start of recession) Start of Recession Quarters

  5. US Real Exports-Measuring the Impact(Index Q-O-Q Change from start of recession) Start of Recession Quarters

  6. US Real Imports-Measuring the Impact(Index Q-O-Q Change from start of recession) Start of Recession Quarters

  7. What’s Ahead?

  8. US Continues to Shed Jobs(Index M-O-M Change from start of recession) Start of Recession Months

  9. USHousehold Credit Debt Outstanding(Billions $)

  10. US Savings Rate Rising(Monthly, SAAR)

  11. Shape of Recovery & Role of Trade • V, U, W…Nike swoosh…gradual & slow • Orthodox view…trade recovery is slow • Value of trade falls more than volume • Commodity and asset prices under pressure • Majority of trade is intermediate goods • Falling prices can increase trade volume

  12. SD Economic Opportunity is Knocking at California’s Southern Door • Mexico is CA largest export market • Otay Mesa is CA/MX busiest trade border crossing • 1.5 million trucks per year $36B in trade • 95% of regional freight movement is carried by truck

  13. SD Value of Trade Has Nearly Tripled (San Diego Customs District, $Millions)

  14. SD Trade Growth Outpacing GRP(Cumulative Growth Rate 1992-2008 current $)

  15. SD Otay Mesa Commercial POECurrent ”Congested” Conditions 4.36 million working hours of delay annually

  16. Lost Import Opportunities = 15% $2,069 Lost Export Opportunities = 13% $1,256 SD Border Delays Reduce Trade…and(Delay range: autos 45 min.-2hrs. Trucks 2hrs.-6hrs.) $16,000 $12,000 Output (in millions) $8,000 $13,793 $9,382 $4,000 $0 Exports to Mexico Imports from Mexico

  17. …Economic Growth (Border Delay Annual Impact to United States & Mexico) $8.63 Billion in OUTPUT LOST = 23 Super Bowls 73,900 JOBS LOST = 4½ Google Companies

  18. SD SR11 Project Study Area

  19. SD SR11 Project Progress • Toll Legislation Approved – SB 1486 (Ducheny) • U.S. Presidential Permit Approved • Exchange of Diplomatic Notes with Mexico • Tier I Program EIS/EIR Approved • Scoping Document: Project Study Report • Transportation Border Congestion Relief Program (TBCRP) Designation

  20. SD SR11 Estimated Project Budget: $615-$715 Million Programmed Funding Available: State (STIP) Tier II Env./Eng. $13.0 M Federal (SAFETEA-LU) Tier II Env./Eng. $ .8 M State (Prop. 1B TCIF) Construction $75.0 M Total $88.8 M Remaining Funds Needed:(Toll Funds/Other): $526.2 - 626.2 M

  21. SD SR11 Project Schedule Develop Financial Strategy 2009 Tier II Environmental Doc. 2010 Design/Right of Way 2011 Begin Construction 2012-13 Open New Trade Gateway 2014-15

  22. Trade Responseto Global Downturns Marney Cox Chief Economist SANDAG March 2010

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