In the past couple of weeks, there has been lots of doom and gloom stories about the economy based on a single month of bad economic data. To be sure, when the economy hits a bump in the road to recovery - especially a recovery from a downturn that is unparalleled in living memory - a good deal of concern is what we get. What is different now is that in our traditional and non-traditional media, we have replaced real analysis with panic, and real news with sensationalism. Hence, while everyone was screaming about how bad the economy was getting, they forgot to tell us something something pretty big happening in this country: our exports are at a record level.
The American trade deficit shrank unexpectedly in April after the United States sold $175.6 billion in goods and services overseas, the most exports on record, the government reported on Thursday.So why is this so important? As the globe becomes smaller and more and more countries develop a consumer base, it is ever more important for us to be able to export our goods and services to other countries. We cannot afford simply to be a nation where cheap goods from overseas are dumped in our Walmarts. We must become the country that the world looks to for quality products.
The Commerce Department report said that exports of goods were $126.4 billion and services $49.1 billion, while total imports were $219.2 billion, resulting in a trade deficit of $43.7 billion, the lowest since December. The deficit in March was revised down to $46.8 billion from $48.2 billion, the department said.
The gap had been forecast by some economists to widen to $48.8 billion.
In January of 2010, President Obama set a goal to double American exports within five years. Since then, he has put in place some very US-friendly trade deals, including the South Korean Free Trade Agreement that opens up the South Korean auto market to US auto makers, a deal with India to increase US exports to India by $10 billion (which would also support 50,000 American jobs), and other trade deals with strong, enforceable labor standards written into them. Often times, liberals tend to be predisposed to fear trade, and there is ample reason to be, given the US trade policy over the last three decades or more, which focused only on cheaper goods from abroad for American consumers.
The era of simply being a consumption nation while we make nothing, however, turned out to be unsustainable. We ended up building an economy that created downward pressure on labor costs here at home, exploitation of labor abroad, and a consumption binge dependent on credit card purchases. During and after the financial catastrophe of 2008, consumer credit tightened significantly, and even two-dollar tube socks are hard to afford if you don't have a job. Financial services, important as they may be, are no match for an economy in which manufacturing is a significant part. But to manufacture more, we had to do two things: first, ensure that we had policies in place to support American manufacturing, and second, sound trade policies that allow us to sell American goods abroad. Let's face it: we are a tiny percentage of the world population and will not forever be the only dominant consumer nation.
Of course, the incredible part is that we are still the nation that the world looks to for bold inventions and innovations - whether in computers, renewable energy technologies, or now even cars. Thanks to President Obama's leadership in the auto rescue, all three US auto makers are now gaining market share. On the other hand, as of 2010, China and Taiwan combined manufacture 60% of the world's solar panels, a technology invented in the United States. Germany is the biggest solar market in the world. The global demand for solar technology is growing, and the US can play a significant part in it. Perhaps with an eye towards this that President Obama insisted on a large investment in renewable energy in the 2009 Recovery Act, and today laid out a high-tech jobs program. China does not have to provide 60% of the world's solar panels. We made the solar panel, and we can manufacture them and sell them.
I suppose there are people who would like to see a United States that closed off trade. That, however, is simply not a feasible option. Like it or not, we live in a global community whose future is intertwined with ours, and ours with theirs. As middle classes grow and prosper across the developing world, we must see it as an opportunity, not a threat. That is what President Obama has done. He has tried to give the American worker and American industry a hand up. So our exports are now at a record level. It's not good enough, but it's a great start. We need to be making things the world wants to buy. That, frankly, is a big part of how we will rebuild our own economy to prosper in an interconnected world.