Bad News on Trade: In the Data and on the Campaign Trail
By SBE Council at 4 March, 2016, 9:49 am
by Raymond J. Keating-
The latest data from the U.S. Bureau of Economic Analysis shows more bad news on trade. In fact, the fall off in both exports and imports for the past year-plus has been quite dramatic.
Exports Down for 4 Straight Months
On the export side, January exports declined versus December levels, and have fallen for four straight months. In fact, monthly exports in January registered $176.5 billion compared to the high of $197.8 billion in October 2014. That’s a decline of 12 percent.
Imports Fall for 5 Straight Months
Meanwhile, January imports also fell versus December, and for five straight months. And January imports of $222.1 billion were down by nearly eight percent compared to the $240.5 billion high registered in December of 2014.
So, for over a year now, both exports and imports have been on the decline, reflecting sluggish global and U.S. economies, and limiting opportunities for U.S. entrepreneurs, businesses and workers.
Make no mistake, trade is central to U.S. business and economic growth. Compare, for example, that in 1960 real exports equaled 3.7 percent of real GDP and total trade (exports plus imports) was 7.8 percent to the fact that in 2015 real exports had risen to 12.9 percent of real GDP and total trade to 26.2 percent.
Policy and Politics
It is critical, therefore, to get policymaking right on trade. Barack Obama ran for president as a protectionist in 2008. Thankfully, Obama did not go overtly protectionist once in office. His efforts on the Trans-Pacific Partnership accord and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union certainly are welcome, but came very late in the game.
Meanwhile, three candidates in the current presidential race – Bernie Sanders, Hillary Clinton and Donald Trump – are serving up often-harsh protectionist rhetoric on trade. And that’s dangerous for U.S. small and mid-size businesses (as, for example, 97.7 percent of exporters have less than 500 workers), large businesses, workers and economic growth. As economics and history show (remember that Great Depression thing?), one surefire way to sink an economy is to impose protectionist burdens on entrepreneurs, businesses, workers and consumers.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.