1st Quarter 2015



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The 3.7 percent decline was the largest quarterly loss since the height of the global financial crisis in 2009.


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International Trade Report

by Steven G. Livingston | 1 | 2 | 3 | 4 | 5 | 6 | 7 |

Tennessee exports fell $258 million to $7.78 billion in the first quarter of the year. The 3.7 percent decline was the first quarterly loss since the 4th quarter of 2012, and the largest quarterly loss since the height of the global financial crisis in 2009. If it's any consolation, the state's decline was smaller than that for total American exports. They fell a bit more than 5 percent for the quarter.

The decline was broad-based. Five of the state's top six export commodities (at the four-digit HS level) lost ground for the quarter. Exports were similarly down to every major geographical region. While there were some idiosyncratic reasons, such as a sharp decline in auto sales to the Gulf states due to buying season and model changeovers, it's clear that the combination of a slow global economy and a rising dollar simply proved too much for Tennessee exporters, as it did for their American counterparts as well. The sharp loss of over $36 million in medical-related shipments to Japan is one example of the effect of the suddenly almighty dollar. The rare fall in global whiskey sales (from $153 million to $138 million) is another. We might also credit a good portion of the $50 million reduction in exports to Canada to the rising exchange rate.

Indeed, quarterly bright spots are rather difficult to locate if we set aside a rather fluky $66 million aircraft sale to Iraq in January. Exports to Europe were off $69 million, to South America $43 million, to the Gulf states $57 million, and to East Asia $76 million. They even fell $9 million in the NAFTA region, as a modest gain in Mexico wasn't enough to offset that $50 million Canadian loss. The fall was not uniform, of course, as state exporters forged gains in several countries, such as Korea, Germany, and the UK. But the broad trend was clear.

A pick-up in cotton exports accounts for the few areas where exports managed to rise. A massive increase in cotton exports to Vietnam joined a smaller gain in Indonesia to push foreign shipments to the ASEAN region into the black. It was also cotton that accounted for the quarter's best-performing market, Pakistan (if we exclude that single shipment to Iraq).

The automotive sector, the state's star performer for quite some time, finally stalled. Car and SUV sales dropped substantially, from $747 million to $626 million. (This figure, however, hides a very large increase in diesel car shipments.) The lion's share of this loss was in Saudi Arabia and the other Gulf states. Auto exports were more or less flat elsewhere in the world. On the flip side, auto parts exports continued to do relatively well. Parts exports listed under the motor vehicles parts export code (HS 8708) eked out a small gain for the quarter.