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Visualizing 150 Years of Exports for Top Economic Superpowers

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This graphic shows how global export shares by value have changed over the last 150 years.

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150 Years of Exports by Economic Superpowers

Historically, the biggest economies in the world have also been those that dominate international trade overseas.

This visualization uses data from the Peterson Institute for International Economics (PIIE) and the World Trade Organization to show how global export shares by value have changed over the last 150 years for some of the world’s top powers.

Merchandise Exports Share 1870-2022

During the 19th century, Britain was the world’s richest and most advanced economy. The economy was the most industrialized globally, with one-third of the population employed in manufacturing.

As a result, the UK’s finished goods were produced so efficiently and cheaply that they were widely traded worldwide, and were easily found in almost any other market.

Additionally, the British Empire benefited from its colonies, with India representing 42% of its exports by the end of the century.

During that period, Britain dominated merchandise exports, followed by Germany:

YearUKGermanyU.S.JapanChinaROW
187024.3%13.4%5.0%0.1%2.8%54.4%
191318.5%18.0%9.0%0.8%2.0%51.7%
192912.2%13.3%11.5%1.7%2.4%58.9%
194811.3%1.4%21.6%0.4%0.9%64.4%
195013.3%4.5%14.6%1.2%2.1%64.3%
19539.0%5.3%14.6%1.5%1.2%68.4%
19637.8%9.3%14.3%3.5%1.3%63.8%
19735.6%11.5%10.3%5.6%0.7%66.3%
19835.0%9.2%11.2%8.0%1.2%65.4%
19905.3%12.0%11.3%8.2%1.8%61.4%
19934.9%10.3%12.6%9.8%2.5%59.9%
19985.0%9.9%12.4%7.0%3.3%62.4%
20004.4%8.5%12.1%7.4%3.9%63.7%
20034.2%10.2%9.8%6.4%5.9%63.5%
20102.7%8.2%8.4%5.0%10.3%65.4%
20122.6%7.6%8.4%4.3%11.1%66.0%
20192.4%7.8%8.6%3.7%13.2%64.3%
20222.2%6.8%8.5%3.1%14.8%64.6%

After World War II, the U.S. overtook British and German export leadership.

Unlike Europe and many other parts of the world that experienced devastation and economic hardship due to the war, the U.S. emerged relatively unscathed in terms of physical destruction and with a significantly strengthened industrial base.

Asian Growth from the 1980s to the Present

During the 1980s and 1990s, Japan experienced rapid export growth, driven by electronics-related goods, and became one of the largest trading partners of the United States.

Today, China dominates the trade market, accounting for almost 15% of all merchandise.

China’s manufacturing industry has become a leader in producing almost anything from commonplace household items to integral pieces in automotive manufacturing. Some staples of Chinese manufacturing are:

  • Precision instruments
  • Semiconductors
  • Industrial machinery for computers and smartphones

Since 1948, global merchandise exports have grown from $59 billion to $24.3 trillion in 2022.

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Markets

What History Reveals About Interest Rate Cuts

How have previous cycles of interest rate cuts in the U.S. impacted the economy and financial markets?

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Line chart showing the depth and duration of previous cycles of interest rate cuts.

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The following content is sponsored by New York Life Investments

What History Reveals About Interest Rate Cuts

The Federal Reserve has overseen seven cycles of interest rate cuts, averaging 26 months and 6.35 percentage points (ppts) each.

We’ve partnered with New York Life Investments to examine the impact of interest rate cut cycles on the economy and on the performance of financial assets in the U.S. to help keep investors informed. 

A Brief History of Interest Rate Cuts

Interest rates are a powerful tool that the central bank can use to spur economic activity. 

Typically, when the economy experiences a slowdown or a recession, the Federal Reserve will respond by cutting interest rates. As a result, each of the previous seven rate cut cycles—shown in the table below—occurred during or around U.S. recessions, according to data from the Federal Reserve. 

Interest Rate Cut CycleMagnitude (ppts)
July 2019–April 2020-2.4
July 2007–December 2008-5.1
November 2000–July 2003-5.5
May 1989–December 1992-6.9
August 1984–October 1986-5.8
July 1981–February 1983-10.5
July 1974–January 1977-8.3
Average-6.4

Source: Federal Reserve 07/03/2024

Understanding past economic and financial impacts of interest rate cuts can help investors prepare for future monetary policy changes.

The Economic Response: Inflation

During past cycles, data from the Federal Reserve, shows that, on average, the inflation rate continued to decline throughout (-3.4 percentage points), largely due to the lagged effects of a slower economy that normally precedes interest rate declines. 

CycleStart to end change (ppts)End to one year later (ppts)
July 2019–April 2020-1.5+3.8
July 2007–December 2008-2.3+2.6
November 2000–July 2003-1.3+0.9
May 1989–December 1992-2.5-0.2
August 1984–October 1986-2.8+3.1
July 1981–February 1983-7.3+1.1
July 1974–January 1977-6.3+1.6
Average-3.4+1.9

Source: Federal Reserve 07/03/2024. Based on the effective federal funds rate. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992, 1984-1986, 1981-1983, 1974-1977).

However, inflation played catch-up and rose by +1.9 percentage points one year after the final rate cut. With lower interest rates, consumers were incentivized to spend more and save less, which led to an uptick in the price of goods and services in six of the past seven cycles. 

The Economic Response: Real Consumer Spending Growth

Real consumer spending growth, as measured by the Bureau of Economic Analysis, typically reacted to rate cuts more quickly. 

On average, consumption growth rose slightly during the rate cut periods (+0.3 percentage points) and that increase accelerated one year later (+1.7 percentage points). 

CycleStart to end (ppts)End to one year later (ppts)
July 2019–April 2020-9.6+15.3
July 2007–December 2008-4.6+3.1
November 2000–July 2003+0.8-2.5
May 1989–December 1992+3.0-1.3
August 1984–October 1986+1.6-2.7
July 1981–February 1983+7.2-0.7
July 1974–January 1977+3.9+0.9
Average+0.3+1.7

Source: BEA 07/03/2024. Quarterly data. Consumer spending growth is based on the percent change from the preceding quarter in real personal consumption expenditures, seasonally adjusted at annual rates. Percent changes at annual rates were then used to calculate the change in growth over rate cut cycles. Data from the last full quarter before the date in question was used for calculations. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992, 1984-1986, 1981-1983, 1974-1977).

The COVID-19 pandemic and the Global Financial Crisis were outliers. Spending continued to fall during the rate cut cycles but picked up one year later.

The Investment Response: Stocks, Bonds, and Real Estate

Historically, the trend in financial asset performance differed between stocks, bonds, and real estate both during and after interest rate declines.

Stocks and real estate posted negative returns during the cutting phases, with stocks taking the bigger hit. Conversely, bonds, a traditional safe haven, gained ground. 

AssetDuring (%)1 Quarter After (%)2 Quarters After (%)4 Quarters After (%)
Stocks-6.0+18.2+19.4+23.9
Bonds+6.3+15.3+15.1+10.9
Real Estate-4.8+25.5+15.6+25.5

Source: Yahoo Finance, Federal Reserve, NAREIT 09/04/2024. The S&P 500 total return index was used to track performance of stocks. The ICE Corporate Bonds total return index was used to track the performance of bonds. The NAREIT All Equity REITs total return index was used to track the performance of real estate. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992). It is not possible to invest directly in an index. Past performance is not indicative of future results. Index definitions can be found at the end of this piece.

However, in the quarters preceding the last rate cut, all three assets increased in value. One year later, real estate had the highest average performance, followed closely by stocks, with bonds coming in third.

What’s Next for Interest Rates

In March 2024, the Federal Reserve released its Summary of Economic Projections outlining its expectation that U.S. interest rates will fall steadily in 2024 and beyond.

YearRange (%)Median (%)
Current5.25-5.505.375
20244.50-4.754.625
20253.75-4.03.875
20263.00-3.253.125
Longer run2.50-2.752.625

Source: Federal Reserve 20/03/2024

Though the timing of interest rate cuts is uncertain, being armed with the knowledge of their impact on the economy and financial markets can provide valuable insight to investors. 

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