EXPORTS ARE now the only sector of the American economy showing steady and substantial growth. Export performance will have a lot to do with whether the country goes into a recession and, if so, how deeply. Fortunately, the Commerce Department's trade figures for June show that in foreign sales, at least, things continue to go well.
One reason is good work by manufacturers. Another is very rapid growth in Japan and Europe, expanding the markets for the kinds of machinery and technically advanced equipment in which Americans are most competitive. That's extremely good luck. The recessions of 1975 and 1982 were unusually severe because the whole industrial world went into them more or less simultaneously. If the United States now goes into a recession while its big customers abroad continue to boom, that will greatly reduce the pain here.
The enormous increase in foreign trade over the past 20 years has been a force for deep and permanent change in the structure of the economy. But that increase has followed a curious and irregular pattern. In the 1970s both exports and imports doubled in relation to the size of the economy. In the 1980s, imports stayed high while exports dropped sharply in the first half of the decade. The result was the succession of huge trade deficits in the later Reagan years. Now exports are rising again -- but it's always easier to lose markets than to regain them. While exports are a lot higher than they were five years ago, in proportion to GNP they are still not back to the level of 1980.
The trade deficit continues, and the June numbers provide only limited encouragement. They show the deficit lower than in any month since 1983, but some of the reasons for that progress are unlikely to prove very durable. Americans were importing oil at $15 a barrel in June; the current price is up around $26. At the present volume of imports, that will mean a difference of almost $3 billion a month. If nothing else changes, that will raise June's comparatively low trade deficit of $5.1 billion to a much less encouraging one of $8 billion or so in August.
What's the United States exporting most successfully these days? Heavy machinery, airplanes, computers, chemicals, scientific instruments and a lot of agricultural products beginning with tremendous amounts of corn. If foreign sales of these goods don't go up, then sooner or later imports will have to come down -- bringing the standard of living down with them. American prosperity now depends on the exporters.