| Average, 1949-2009 |
8.3% |
| Needed to double exports in five years: |
14.8% |
| Actual growth, first quarter 2010 |
16.6% |
Where will America's economic growth come from? How will unemployment go down? In last Friday's Idea Lab, the DLC reviews the short list of options: with families saving, growth driven by home buying and shopping is less likely; as stimulus fades, government support for growth will decline. With strong exports the only choice, President Obama's January call for doubling exports in five years reflects necessity as well as enthusiasm.
In dollar terms, to double in five is to go from $1.55 trillion in 2009 to $3.1 trillion by 2014. In statistical terms, it means raising America's annual export growth to 14.8 percent, from the 8.3 percent average between 1949 and 2009. Ambitious goal! But with one quarter gone and 19 quarters left, exports are up 16.6 percent -- manufacturing exports in particular have jumped -- and we are on track to meet the president's goal. So far, then, so good ... but two points about this year's growth raise questions about the future:
Awful base year: In 2009, the financial crisis cut American exports from $1.83 trillion to $1.55 trillion. This 15 percent drop was the steepest since the 34 percent crash in 1932. Since World War II, the sharpest export declines until last year were a 6 percent drop in 2001, and a 3 percent decline in 1983. The return of global growth makes fast export growth this year likely without policy help; afterward it gets harder.
European Crisis: By country, five big partners buy about 66 percent of American exports: in order, the EU, Canada, Mexico, China and Japan. Four of these five are buying lots more than they did last year: exports to China and Hong Kong are surging, up 42 percent; sales to Canada, Mexico and Japan are up respectively by 26 percent, 22 percent and 15 percent. But European Union members are the exception. They usually buy about 25 percent of American exports and fully 40 percent of services exports, and are up only 1 percent this year. (And neighboring Russia, though still a small export destination, is down 5 percent.) The financial crisis erupting in Greece, and the accompanying fall in euro values, will make this all the worse, meaning we would need truly historic performances in other regions to meet the president's goal.
So -- a good start, but not one that will be easy to sustain for 19 more quarters, without some push from policy. DLC's Idea Lab therefore says that with the big challenges of the administration's first year met -- emergency response to crisis done, health reform passed -- it is time for a more ambitious trade policy. The National Export Initiative, based on export promotion and review of export control laws, is a good start but not enough; likewise multilateral currency diplomacy with China is an important part, but only part, of the effort. Beyond this: pass the signed FTAs with Korea, Colombia and Panama; rethink the anachronistic embargo on exports to Cuba; come up with clever initiatives for Europe, Canada, Japan and other rich-country markets; push for larger market-opening initiatives, in particular the WTO's Doha Round, and Russia's apparently reviving campaign to enter the WTO.
Idea Lab essays are released on alternate Fridays. The first looked at waning public confidence in government; this edition takes on growth, unemployment and the need for a more ambitious trade policy, and has some pointed words for trade critics: http://www.dlc.org/ndol_ka.cfm?kaid=450022
President Obama's comments to the Ex-Im Bank: http://www.whitehouse.gov/the-press-office/remarks-
president-export-import-banks-annual-conference
The DLC's Ed Gresser outlines a trade strategy: http://www.dlc.org/ndol_ci.cfm?kaid=108&subid=900010&contentid=255039
Exports by country -- Startling to learn, no United States government statistical report actually lists combined exports of goods and services. The Commerce Department's monthly reports, done by the Census Bureau, don't list services trade by country. The services figures, meanwhile, come out only annually and are done by the Bureau of Economic Analysis. (The most recent services-by-country data are pre-crisis figures from 2008.) The two are never combined. Filling this irritating gap, the table below breaks out American exports by country for 2008.
| |
Value of U.S. Exports |
Share of Total Exports |
| WORLD |
$1802 billion |
100% |
| European Union |
$468 |
26% |
| Canada |
$307 |
17% |
| Mexico |
$175 |
10% |
| China & Hong Kong |
$113 |
6% |
|
| (Mainland China only) |
($86) |
(5%) |
| Japan |
$106 |
5.5% |
| All other countries |
$634 |
35% |
As of 2010, the shares have shifted a bit, with China and Hong Kong approaching 10 percent of exports, while the EU and Japan drop back a bit and the rest of the world remains roughly stable. Of $294 billion in goods exports so far: $58 billion to Canada, $57 billion to the EU, $37 billion to Mexico, $27 billion to China and Hong Kong, $15 billion to Japan. Next come Korea at $9 billion and Brazil at $7 billion, then Singapore, Taiwan, Australia, Switzerland and India. With services included, Japan, Canada and especially the EU have larger shares.
The two main sources of U.S. trade data -
And a look back -- Last year's $270 billion fall in exports was a 15 percent drop from the 2008 record. Imports fell by $600 billion or 24 percent, likewise the largest drop since the Hoover era. BEA's one-page summary of import/export totals since 1960: http://www.census.gov/foreign-trade/statistics/historical/gands.pdf
And this year's worry -- The European Union's mission in Washington, with a report on crisis management, in between anti-piracy operations in the Indian Ocean and the EU-Latin America/Caribbean Summit: http://www.eurunion.org/eu/
