1st Quarter 2010


(Click on graph for larger view.)


tennessee's balance of trade

 

biggest losers: tennessee's biggest trade imbalances

 

import concentrations

 

tennessee monthly imports

(Tennessee Imports)

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Talking about a "balance of trade" at the state level is not very meaningful. Tennessee is hardly a separate economy; it is fully integrated into the U.S., and trade balances convey information only at that level. However, one can't help but want to know what that balance looks like anyway! As we've said, Tennessee is definitely in the hole, importing quite a bit more than it exports. But that huge gap is actually accounted for by a handful of countries, the ones shown as the state's "biggest losers." China, of course, is on a different level than any of the others. The state imports more than $13 billion from China, dramatically more than its 2009 exports of $1.29 billion. China, in fact, accounts for about half of the state's trade imbalance.

One reason that a few nations so dominate the import picture is that the state's sources of each particular import are highly concentrated. Most products come from only a couple of countries. For example, almost all computer imports come from China or Malaysia (the latter is where Dell sources from). Of the state's major imports, only apparels show much variety. There, the top four countries account for "only" about half of the imports coming in to Tennessee. This reflects the emerging pattern of world trade, whereby specific places focus on making specific products. So we have Ireland and France as the dominate source of medicaments, while apparels and footwear come in from South and Southeast Asia, for example.

The same concentration is found in the products Tennessee imports. The state brings in what local industries need, and that is quite specialized. Tennessee actually ranks as a top-five importer of more than 60 individual products, but it accounts for the lion's share of U.S. imports for relatively few. The chart shows those major goods for which the state is bringing in roughly a quarter or more of all U.S. imports. However, the state is also a significant importer of some other goods, such as rapeseed oil (almost 20 percent of U.S. imports) or zinc ores, which Tennessee is the only state to import!

 

import intensity: products for which the state accounts for close to 25 percent or more of U.S. imports


What Do Imports Tell Us?

How should we use this import information? A clue is the fact that the state's imports fell dramatically between 2008 and 2009, the year of the economic meltdown. The level of imports is measuring the level of economic activity. The more production grows, the more imports are needed. Thus, a very good way to view Tennessee's imports is as a sign of its economic health. Increasing imports are signaling a growing economy. Our last chart shows Tennessee's monthly imports over the past two years, and it compares the state's performance to the nation. We see two trends. First, the state and the nation have been tracking each other rather closely. Again, Tennessee is not an isolated economy. Second, import numbers have been rising very significantly in recent months. And that is a strong indicator of an improving economy in the months to come.

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