Final Gap Analysis Report Highlights Lost Exports and Declines in Small Business Exporters

By at 28 October, 2016, 7:52 am

SBE Council's seventh and final Gap Analysis reports looks at the shortfall in exports and small business exporters.

SBE Council’s seventh and final Gap Analysis report looks at the shortfall in exports and small business exporters.

FOR IMMEDIATE RELEASE                        

Washington, D.C. – The Small Business & Entrepreneurship Council (SBE Council) released its seventh “Gap Analysis” report, which shows dramatic shortfalls in U.S. exports, registering a shortfall as large as $635 billion in 2016, and big declines in the number of U.S. exporting firms, including 49,800 missing small exporting firms with fewer than 100 workers.

Raymond J. Keating, SBE Council chief economist and author of the new report – “Gap Analysis #7: Lost Exports, Lost Small Businesses” – noted, “While there has been a great deal of anti-free-trade rhetoric on the presidential campaign trail this year, free trade is a big net plus for U.S. entrepreneurs, businesses, workers and investors.”

Keating added, “Unfortunately, though, the growth in real U.S. exports has been underwhelming, to say the least, in recent years, and that has been bad news for the overall economy, including for small businesses involved in trade.”

Among the reports key findings:

Slower export growth. Looking at quarterly GDP data from 1956 to mid-2016, the real annualized growth rate in exports averaged 6.8 percent. But since the start of the last recession in the fourth quarter of 2007, real export growth has averaged a mere 3.2 percent. And looking at the current expansion/recovery period, real exports have grown at an average rate of 4.8 percent.

Lost exports. If U.S. annual real exports had grown at the average rate in annual data prevailing from 1956 to 2016, then over the period of 2009 (the year in which the recovery began) to 2016, real exports (in 2009 dollars) would have been $257 billion higher than they actually are estimated to be in 2016. Going back to 2007 (the recession began in December 2007), real exports would have been $635 billion (2009 dollars) higher, if growing at the much higher long-run average growth rate, than they actually are estimated to be in 2016.

Lost exporting firms, including small businesses. Lost export opportunities have meant a decline in the number of U.S. exporters, and since most exporters are small and medium-size enterprises, we are suffering a noteworthy shortfall or gap in the number of small business exporters. Consider that if the average growth rate in exporting firms for 1997 to 2007 had prevailed over the period of 2008 to 2014, there would have been approximately 51,660 more U.S. exporting firms in 2014 than there were. The same dire trend is found among smaller exporting firms, as there would have been approximately 48,870 more U.S. exporting firms with fewer than 500 workers, and approximately 49,800 more U.S. exporting firms with fewer than 100 workers.

Keating concluded, “While multiple factors play into the causes for these gaps, key among them are found on the policy front. First, the U.S. largely abandoned its leadership role in advancing free trade over the past eight years, and serious questions regarding future trade policy loom given the hostility toward current agreements, potential new agreements, and trade in general expressed to varying degrees by both leading party presidential candidates. Second, a general anti-growth agenda regarding taxes, regulations, government spending and debt, and monetary policy has resulted in much slower U.S. economic growth, which in turn negatively affects global growth, and therefore, international trade.”

The results in this seventh SBE Council “Gap Analysis” line up with the findings in the earlier reports showing gaps when it comes to GDP, private investment, entrepreneurship, productivity, income, and jobs.

The GAP Analysis Series

The first analysis – Gap Analysis #1: The GDP Shortfall – estimated a GDP shortfall of $2.7 trillion (in 2009 dollars) in 2016 thanks to real GDP growth running at less than half the rate it should during a recovery/expansion period.

The second report – Gap Analysis #2: Lost Decade of Private Investment – reported a historic gap or shortfall in private-sector investment over the most recent decade, for example, with real fixed nonresidential investment (or business investment) coming up $1.1 trillion (in 2009 dollars) short of where it should be in 2016.

Gap Analysis #3 – Entrepreneurship in Decline: Millions of Missing Businesses – points to an estimated gap or shortfall of between 867,000 and 4.8 million businesses in the U.S. economy.

“Gap Analysis #4 – The Productivity Shortfall: Causes and Results” – noted the dramatic slowdown in productivity growth in recent years, with annual labor productivity growth averaging a woeful 0.4 percent from 2011 to 2016, compared to average annual growth of 2.0 percent from 1956 to 2016.

“Gap Analysis #5: Americans’ Lost Income” – reported that if per capita real personal disposable income grew at the average historic rate since 2009, real per capita personal disposable income in 2015 would have been $2,000 higher (2009 dollars) on average for individuals, and $8,000 higher for an average family of four.

GAP Analysis #6: America’s Lost Jobs – shows dramatic shortfalls in the U.S. labor force and in job creation, in particular, noting that the U.S. effectively is suffering from a shortfall of 8.1 million jobs.

Contact: Raymond J. Keating

631-909-1122 or 703-242-5840


SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. To learn more, visit SBE Council’s website: Follow on Twitter: @SBECouncil

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