One of the largely hidden signs of the progress of the recession is whether goods are being shipped from one city to another and from one country to another. What is not shipped is not put up for sale.

Fedex (FDX) and UPS (UPS) have said that their businesses are faltering, but the situation may be getting much worse than that.

According to the FT, "The International Air Transport Association said traffic volumes fell 22.6 per cent year-on-year in December. Air freight accounts for 35 percent of the value of goods traded internationally."

While global trade is certainly not off 35%, the numbers could point to a 10% drop, which would be unprecedented.

The news is particularly bad for China, and, to a lesser extent, the US. China’s export growth is already slowing. If those numbers begin to contract, the GDP movement of the world’s most populous nation is likely to move toward negative numbers. A recession in China will hurt the rest of the global economy in part because China is an importer of goods for its large middle class. Sales to the to that group are a part of the revenue of a number of American companies.

The US is still a tremendous exporter and the global recession will hurt that. If the air freight numbers are an fair indication,  those exports are slowing to a crawl.

Douglas A. McIntyre

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