Global slump crimps U.S. exports

— -- U.S. exports fell for a fifth-consecutive month in December as global trade continued to evaporate at a startling pace.

Shipments of goods and services fell 6% from November to $133.8 billion, more than 20% below the recent peak in July.

Based on the new Commerce Department data, almost $35 billion worth of export orders vanished in the final half of 2008.

"Trade is plunging. For a precedent, you'd have to go back to the Depression," said Nigel Gault, economist with IHS Global Insight.

U.S. imports also fell in December by 5.5% to $173.7 billion and are down more than 24% since July. That has narrowed the politically charged trade deficit to $677.1 billion for the year vs. $700.3 billion for 2007.

Amid persistent credit problems and weak global demand, no early turnaround in the trade figures is anticipated. For the first time since the early 1980s, the volume of world trade is expected to shrink this year, the International Monetary Fund says.

The poor trade results also will mean a downward revision to the government's preliminary estimate that the economy shrank by 3.8% in the fourth quarter, says Ian Shepherdson of High Frequency Economics.

Economies everywhere are locked in a vicious contraction that shows few signs of easing.

As U.S. consumers slash spending, Chinese factories slow their assembly lines. China reported Wednesday that its exports in January fell 17.5% from December, the worst performance since the 1990s Asian financial crisis.

For Chinese factories, largely dependent upon U.S. and European consumers, the suffering is likely to be protracted.

"The outlook for global consumption remains bleak. Exports are likely to remain lackluster until global consumers regain their appetite for consumption," Jing Ulrich, managing director at JPMorgan in Hong Kong, wrote clients.

Chinese factories' woes mean fewer orders to suppliers across Asia. In December, Taiwan's exports sank 42%, Japan's fell 35%, and South Korea's were down 17%.

"There's been a synchronous decline in activity around the world," says Jay Bryson, Wachovia's global economist.