In last week’s State of the Union, President Obama said:
Third, we need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So…
So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support 2 million jobs in America.
To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports and reform export controls consistent with national security. We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.
But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. And that’s why we’ll continue to shape a Doha trade agreement that opens global markets and why we will strengthen our trade relations in Asia and with key partners like South Korea, and Panama, and Colombia.
U.S. exports have not doubled in dollar terms during a five-year period since the inflation-plagued 1970s, not exactly a golden era for the U.S. economy. In real terms, according to the U.S. Bureau of Economic Analysis, exports have not come close to doubling during any five-year stretch in the past 40 years. The fastest growth in inflation-adjusted exports came in the second half of the 1980s, when they grew by two-thirds from 1985 to 1990.
Addendum: Menzie Chinn focuses on nominal exports in a long post that concludes:
So, if you didn’t know it already, achieving the goal of doubling nominal exports depends upon exchange rate pass through, the extent of exchange rate depreciation, the rate of rest-of-world GDP growth, and the evolution of export supply (of both goods and services).
Will this policy come with variation across industries/products/regions? if so, it gives us an opportunity for easy and interesting papers!
Can’t argue with Dan Griswold. He wrote the book!
I am glad to see people reality-checking the SOTU, the banking reform measures, the budget. They’re full of nonsense from somewhere between a dreamworld and a humanities department faculty common room.
In the reality based community, there’s not a lot of belief that doubling exports out of this recession and with the reduced manufacturing base we now have is possible.