June 11, 2023

Economix Blog: The Quiet Driver of Economic Growth: Exports

The estimates of the nation’s economic performance last year, released Friday, highlight a striking trend: Exports have never been more important.

Foreign buyers purchased more than $2 trillion in goods and services, the first time exports have topped that threshold. And those exports accounted for almost 14 percent of gross domestic product, the largest share since at least 1929.

Source: Bureau of Economic Analysis

We usually talk about exports alongside its opposite number, imports, and since the United States buys much more than it sells – our “trade deficit” — the general impression is that foreign trade is a drag on the economy. But that tends to obscure the importance of exports, which have accounted for about 10 percent of G.D.P. over the last two decades and, since the recession, considerably more.

The growth has come from all areas, but the real strength has come from what might be called the old economy: petroleum, metals, chemicals and farm goods.

(On the short list of goods the United States is selling in smaller quantities than in 2000: tobacco, shoes and apparel, and automobile engines.)

Much of the rise in exports is a consequence of domestic problems. The value of the dollar has declined, so that foreigners save money when they buy American. Businesses, struggling to find customers here, are focusing on foreign sales. And a boom in commodity prices, which has raised the price of life for most Americans, has produced a windfall for those who trade in commodities.

This is a good thing on the whole. The ability of American companies to make money in foreign markets is helping to offset the pain of those domestic problems.

Indeed, the Obama administration has hailed the growth as a key to economic recovery, and in 2010 declared a goal of doubling exports to $3.1 trillion by 2015.

That goal may prove hard to reach, as Annie Lowrey explained in a recent article. But the trend itself is real enough, and likely to continue.

Article source: http://feeds.nytimes.com/click.phdo?i=a9bec3baa6521e3726344641e4618121

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