A group of moderate and conservative Democrats, seeking fresh ammunition in the battle with President Reagan over trade and budget deficits, yesterday brandished a new set of statistics designed to show how badly the United States is losing ground in international trade competition.
The measures of American competitiveness are meant to buttress a series of policy proposals by the Democratic Leadership Council, chaired by Sen. Lawton Chiles of Florida, Rep. James R. Jones of Oklahoma, and Gov. Bruce Babbitt of Arizona.
The bottom line, said Chiles, is that the United States cannot "grow its way" out of its trade deficit. There must be a new attempt to strengthen the economy by shrinking federal budget deficits further and other specific steps to improve the competitiveness of American business, he and other council members said.
The analysis, prepared for the council by Wharton Econometric Forecasting Associates, consists of a "Readiness Index" and a companion indicator called the "Trade Performance Index."
The first of these barometers is designed to measure how well U.S. businesses compete against foreign rivals based on comparative prices of manufactured goods from each nation.
The Readiness index is based on a representative price for U.S. exports compared with export prices from Japan, Canada and Western Europe. The study tracked this price comparison over the past 20 years and calculated how this relationship was affected by shifts in the value of the dollar, in American wage rates, productivity, real interest rates and other factors.
Wharton used 1980 as a reference point, setting the Readiness index at 100 for that year. According to Wharton's calculations, American trade competitiveness, as measured by the index, declined steadily since 1980, reaching 73.43 last month, or more than 26 percent below the 1980 level.
The second barometer, the "Trade Performance Index," compared the quantity of U.S. manufactured exports against imports of manufactured goods. Again, setting the index at 100 for 1980, the benchmark year, the study concluded that the U.S. performance measure stood at 52.96 in September, a drop of just over 47 percent in five years.
The study backed the widely shared conclusion that the bulk of the U.S. decline in trade is because of the strength of the dollar, which has boosted prices of American-made goods by 40 to 50 percent since 1980, compared with rival imported products.
More than 60 percent of the decline in the Readiness Index over the 1980-1984 period was because of the appreciation of the dollar, the study said. Lagging productivity growth, high real interest rates and a decline in the personal savings rate, were the other major factors behind the overall decline in the index, the study concluded.
But although the dollar's strength was the principal culprit, it was not the only problem. The study "suggests that even if the dollar had remained at its low 1980 value, U.S. competitiveness would still have declined noticeably since 1980," because of this country's relatively poorer productivity performance and other factors.