John At The Center

http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0808/document/us0808.pdf

We have warned ad nauseam about the perils of buying into the containment myth. Now, we want to scribble a bit about the decoupling myth. We never understood how there could be as much economic globalization but that a recession in the largest economy would leave the rest-of-the-world’s economies relatively unscathed. Consider that U.S. nominal imports of goods and services were 6.6% of the rest of the world’s nominal GDP in 2006, up from 4.5% 10 years earlier in 1996 (see Chart 1). Now that U.S. imports are contracting in real terms, both year over year and quarter to quarter (see Chart 2), wouldn’t you think that this would be having a negative impact on economic growth in the rest of the world?