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Tom Silva

Tom Silva

Posted: June 17, 2010 09:40 AM

The Coming Export Boom

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Until recently, 70 percent of the United States' GDP was spent on consumer goods and housing, according to Greg Ip, a senior writer for the Wall Street Journal. Because the Great Recession scared Americans to the point where they started saving money for the first time in decades, there has been a decided shift away from consumer spending on the homefront. And what it augurs could be the next transformation in the U.S. economy. To make up for the slack and speed economic recovery, American manufacturers are broadening their efforts to sell more products to expanding overseas markets. To accelerate the anticipated surge, the Obama Administration has committed itself to doubling exports in five years. Despite the canard of America not making anything, we are still strong in medical devices, pharmaceuticals, software, Hollywood movies, cars, auto parts, semiconductors, industrial machinery, food, housing components and even architectural services.

"There's continued strong export growth ahead," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, MA. Exports grew 0.9 percent, the seventh consecutive gain, to $138.2 billion in November of 2009, reflecting increasing demand overseas for food and American-made automobiles and semiconductors. Demand from China for American goods climbed to a record $7.3 billion, led by surging purchases of soybeans, according to the Commerce Department. The increase slashed the U.S. deficit with China by 11 percent to just $20.2 billion. (Remember that the Asian financial crisis of the 1990s with its currency devaluation was what helped create our trade deficit.)

The increase in automobile exports primarily reflects cross-border trade with Canada and Mexico, as well as the growing Asian market. China is now Buick's biggest market and the key reason the brand survived General Motors' bankruptcy restructuring. Buick sales soared 60 percent in China in 2009, to 447,000 cars -- quite a contrast to 2009 Buick sales in the United States, when just 102,306 cars were sold - a precipitous 25 percent drop when compared to the previous year.

Architectural services also are finding new markets overseas. American architects are increasingly designing projects - both commercial and residential - for construction in markets ranging from China to India to the Middle East to Latin America to Europe. A recent American Institute of Architects survey found that large architecture firms reported billings from international work had doubled in just four years. Meanwhile, billings in the United States fell to their lowest levels in 12 years. While there's no hard data, more U.S.-made windows, roofing systems, furnaces and other specialized materials are being shipped overseas to fast-growing countries like China because residential projects designed by Americans are built to U.S. construction standards, said Jim Haughey, an economist with Reed Construction Data. Some of the developments overseas bear an uncanny resemblance to California suburbs and are marketed to affluent buyers who have lived in the U.S. and are attracted to the suburban lifestyle. This trend started during the early 1990s and has intensified in recent years because of the American housing downturn. Homebuilders that have ventured abroad report that doing so has helped them weather the economic slowdown.

So what we are looking at is the next phase of our economic meta-narrative. After the war, we were a fordist economy built around the mass production of consumer durables, union recognition and heavy government involvement in arbitration. In the 1970s, we moved to a post-fordist model of international outsourcing, technological innovation and the emergence of the knowledge worker class. The Great Recession may set the stage to a new export-based model for the American economy. The United States market is only 27 percent of global consumption today vs. emerging markets which are at 34 percent. Clearly, the rest of the world is no longer an afterthought. American corporations need to face this next chapter with a renewed sense of national purpose - a chance to both be integrated within a global framework as an equal rather than an exceptional member (in other words, one that plays by the same rules), and a chance to burnish the Made in America label once again.

 

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