US exports decline: no big deal

July 5, 2013

Steve Avary sends this link, which includes the statement:

The world’s economic growth is increasingly falling on the shoulders of U.S. consumers. But at the same time, a slowdown in U.S. exports is threatening to restrain the already fitful recovery. U.S. imports jumped in May. At the same time, a continued softening in U.S. exports highlighted the global troubles weighing on American firms trying to sell their goods abroad while demand from key trading partners falters.

My take: this line of thought is way overblown. There’s not much evidence that short-term fluctuations in exports have much to do with economic growth. Exports are a nice thing, but they’re not that important to the US economy as a whole. I also think the “US consumer” angle is overstated. What’s lagging in the US economy is investment, not consumption — see these Snapshot figures.

Should we worry? The mounting evidence is that the US economy is growing, but growing more slowly than the average over the last fifty years or more. Good examples are last week’s GDP revisions (Q2 growth reduced from 2.4% to 1.8%) and today’s employment report (jobs up 195k).

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