The Most Important Economic Indicator That Everyone Ignored

Dec 14, 2017
Originally published on December 14, 2017 8:45 pm
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KELLY MCEVERS, HOST:

There are a few economic indicators that got a lot of play this year - the unemployment rate, the GDP the Dow. Now we're going to talk about another economic indicator as part of our series Highly Specific Superlatives, in which we nerd out about the best, the worst, the least, the most of 2017. NPR's Cardiff Garcia co-hosts NPR's newest podcast The Indicator. It's about the big ideas behind business news. And he is with us now. Hey.

CARDIFF GARCIA, BYLINE: Hi, Kelly.

MCEVERS: So hit me. What is your highly specific superlative from 2017?

GARCIA: My highly specific and also highly nerdy superlative is the most ignored indicator that actually says a lot about the economy - the global economy. It's the pace of growth in global trade, the pace of growth in how much we buy and sell goods and services across borders to and from other countries.

MCEVERS: OK, global trade, yeah.

GARCIA: Yep.

MCEVERS: Tell me about it. Like, what's - give me a little snapshot of what that indicator tells us.

GARCIA: I love this indicator. And the snapshot is that it's growing a lot. The IMF projects that by the end of this year it will have grown 4.2 percent. That is a big acceleration on last year. And I think what I love most about this superlative is that it contrasts so starkly with the headlines that we've seen all year about the world turning inward and about protectionism and about countries becoming more self-reliant. I love that this just kind of goes so starkly against that narrative.

MCEVERS: Well, yeah so - OK, explain that because, I mean, you know, I think a lot of people think, like, we're pulling out of trade deals. We're tightening borders. We've you know, scrapped deals like the Trans-Pacific Partnership and threatened to tear up NAFTA and all of that stuff. So, like, how does this square with all that?

GARCIA: Yeah. So I guess the simple answer here is that so far at least, there's been more talk than action. So yeah, we've threatened to pull out of NAFTA, but NAFTA is still in place. We did leave the Trans-Pacific Partnership, but keep in mind that the other 11 countries are still going ahead. And so what we've learned is also that the U.S. isn't the only country that matters here, that this is global trade, not just U.S. trade with everybody else - and so...

MCEVERS: Right.

GARCIA: ...More talk than action. And also, we're learning that maybe the U.S. isn't the only place that that counts here.

MCEVERS: OK. How do we want to think about this going forward?

GARCIA: Yeah. I mean, this is a - it's a complicated narrative. If you think about it, it's not like right now if you make a product in another country and then you send it to a country to be bought and sold, that that's the way things still work. That's sort of the old world, right? Now the way it works is that as a product gets made, it passes through a bunch of different countries, and each country has a process or a factory that adds a component or a new way of making it by the time it gets to its final destination to be sold.

And so even if you make it hard to do business with, say, Mexico, well, OK then, the factory and that process just shifts somewhere else. It's like this big supply chain gets redirected. And so what we're seeing now is that it's just really, really hard to deconstruct that process. The world is very closely integrated, and it's not easy for any one or two places to just turn that away.

MCEVERS: NPR's Cardiff Garcia co-hosts The Indicator. It's a podcast about the big ideas behind business news. Thanks a lot.

GARCIA: Thanks, Kelly. Transcript provided by NPR, Copyright NPR.