When someone insists the U.S. economy hasn't recovered, has lost its manufacturing base, or is being slaughtered by a weakening dollar, point them to this chart:
Exports are on fire -- up 20% since bottoming in 2009, and easily at an all-time high. And this isn't just exporting services. Exports of physical goods have also blown past prerecession levels, up 43% since 2009. The common notion that America's manufacturing muscle has withered is only true for manufacturing jobs. The actual manufacturing of goods is on a tear, and at an all-time high.
The benefit exports have had on GDP has been massive. Since mid-2009, exports have accounted for 45% of GDP growth, or almost the same amount that came from consumer spending growth, even though the latter's share of the economy is several times larger.
What's behind the surge? Booming nations abroad, and weak dollar.
Exports to China, for example, are up almost 20% year over year. Exports to Brazil are up 42%. Mexico, up 30%. OPEC nations, up 13%. South Korea, up 19%. Some of these countries are growing fast. Those that aren't still have expanding middle classes eager to get their hands on a quality of life that often includes American goods.
Then there's a weaker dollar. The U.S. Dollar Index, a measure of the dollar's strength against a basket of global currencies, is down 20% since last summer, and by roughly the same amount since 2006. Most commentators focus relentlessly on the negative features this brings: higher import prices, which most notice though surging commodity costs, particularly oil.
But almost everything in economics has a tendency to balance. It's a bit like physics: for every action, there's an equal and opposite reaction. A weak dollar raises import prices, but it also raises export demand. The U.S. still imports far more than it exports, so we're simply working our way toward closing the net-exports gap. Still, it's a step in the right direction.
The impact all this has on companies that heavily export is huge. Caterpillar
There's no question that for now overall U.S. manufacturing seems to be weathering the economic storm reasonably well and a weak dollar provides opportunities for export. I think that 3M's growth and that of the U.S. economy is still going strongly led by emerging markets.
Commodity exports are also booming. Measured in millions of tons, coal exports this year are expected to hit the highest level since 1991. A surge in agriculture prices has also lifted food exports to a new record high.
All of this is about balancing. For years, the U.S. relied far too heavily on domestic consumer spending, detatching itself from a global growth story that we can't afford to miss. That's changing. When the recession began three years ago, many warned of decoupling, or the idea that the rest of the world would surge without the U.S. enjoying any of the gains. Today's data show that almost certainly is not the case. The U.S. might not be the fastest-growing economy in the world, but it doesn't have to be. Riding the back of tomorrow's giants is nothing to be ashamed of.
