Can exports save the U.S. economy?
One of the few bright spots in the U.S. economy lately has been the fact that we’ve been exporting a whole lot of goods abroad. According to the Commerce Department, U.S. exports hit $180.4 billion in September, a record high. Overall, exports have risen 23 percent since the end of the recession in 2009 — a better performance than in any of the previous four downturns. The trade deficit is shrinking. For all the talk about decline, America still produces a lot of stuff that people want. So what can this tell us about the economy?
For one, it’s another piece of evidence that lack of demand — and not taxes or regulatory uncertainty — is the main thing holding back growth. As Georgetown business professor Jay Shambaugh notes: “In foreign markets where economies are growing quickly, U.S. exports are rising fast. American businesses do not seem to be held back by fear of taxes or regulation; they are hiring and increasing production for sale where there are customers.” Exports are outperforming the rest of the economy because there’s demand for those goods (as Shambaugh notes, the weaker dollar has only played a partial role here). At home, meanwhile, demand is still weak: Consumers have lost a lot of housing wealth since 2007, which has held back spending, and the government isn’t filling in the gap. Big difference.
The other thing to note is that we probably can’t count on exports alone to lift the United States out of its doldrums. Gennaro Zezza of the Levy Economics Institute draws up a chart, using IMF numbers, showing that America’s trading partners are expected to hum along at a steady — but not accelerating — pace for the foreseeable future. Meanwhile, the euro zone, which buys up about 16 percent of U.S. exports, is going to slow down and possibly enter a recession soon. That alone probably won’t be fatal to the U.S. economy, but it’s not good news, either.