Latest Trade Report is a Good News-Bad News Story

By at 8 March, 2022, 2:32 pm

by Raymond J. Keating –

Other than trying to find ways to justifiably punish Russia for the war it has launched against Ukraine, two attitudes seem to be prevailing these days among Members of Congress and President Biden toward trade: indifference or hostility. That’s unacceptable, of course, given how important trade is to our economy, that is, to consumers, to small businesses, and to workers.

Keep in mind that trade makes up a massive chunk of our economy. Real total trade (that is, real exports plus real imports) equaled 30.3 percent of real GDP in 2021. Compare that to 6.3 percent in 1955, for example.

Over the past few years, however, growth in trade has largely faltered. Real exports declined in 2019, which was pre-pandemic, and in 2020, with some growth in 2021. However, the level of real exports in 2021stood well below the high achieved in 2018, and has exhibited little growth over the past decade.

Meanwhile, real imports, nearly all of which are inputs to U.S. businesses, experienced minimal growth in 2019, declined in 2020, and then saw respectable growth in 2021, moving above the 2019 high.

The Latest Numbers: Exports Stagnate, Imports Up

As for the latest data just released by the U.S. Bureau of Economic Analysis, U.S. exports declined in January 2022 versus the previous month. In fact, U.S. exports have effectively stagnated for the past three months. Regarding imports, growth continued in January for the sixth month in a row. So, the trade story for the first month of 2022 was mixed – good news on imports, bad news on exports.

Trade is Vital to Small Businesses

Again, given the importance of trade, these data amount to a bad news-good news scenario for the overall economy.

For good measure, this very much is a small business story. Based on data from the latest report from the U.S. Census Bureau, among all identified U.S. exporting firms:

● 76.3 percent had fewer than 20 employees

● 86.3 percent had fewer than 50 employees

● 91.4 percent had fewer than 100 employees.

And among all identified U.S. importing firms:

● 76.7 percent had fewer than 20 employees

● 86.4 percent had fewer than 50 employees

● 91.3 percent had fewer than 100 employees. Trade is about small business.

Policy Indifference is Not an Option

So, as already noted, policy hostility or indifference toward trade simply is unacceptable if we are serious about seeing recovery and growth in small business, economic, income and employment growth.

Outside of responses to Russia due to its unjust war on Ukraine, both the Biden administration and Congress should be embracing an agenda focused on reducing governmental barriers to trade (such as tariffs and quotas) abroad and at home, that is, focused on advancing free trade agreements and opening markets for small businesses.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


News and Media Releases