Saturday, May 19, 2018
Business

U.S. nearly halfway to Obama's goal of doubling exports

WASHINGTON — Suddenly, outsourcing is on the way out and insourcing is on the way in as the U.S. trudges unevenly toward President Barack Obama's goal of doubling American exports around the world by the start of 2015.

So far, export levels are about halfway to his mark.

Obama set the five-year target in his January 2010 State of the Union address.

While economists and industry leaders generally expect the ambitious target to be missed, impressive gains already booked in American manufacturing and exporting suggest such a miss may not be by that much.

Why the optimism toward a manufacturing comeback? Here are five reasons:

• Cheap U.S. natural gas and other increased energy production are helping to power U.S. factories more efficiently, with gas, especially, providing inexpensive raw materials for U.S. manufacturers of plastics, tires, certain pharmaceuticals and other petrochemical products.

• Higher wages in China and other foreign export markets are making outsourcing less profitable to U.S. firms.

• Congressional approval in 2011 of trade agreements with South Korea, Colombia and Panama and other agreements being negotiated now with Asia and Europe are promising to open more foreign markets to U.S. products.

• High U.S. unemployment is relieving pressure on factory owners to increase wages, helping to make U.S. labor costs more globally competitive.

• Major technology advances have steadily boosted factory efficiency and worker productivity.

Yet while many industries are doing more with fewer workers, more than half a million new manufacturing jobs have been added in just the past few years.

Of course, some big bumps lie in the road. Europe is mired in recession, the American economy continues to expand at a snail's pace and the jobless rate sits at a stubbornly high 7.7 percent almost four years after the 2007-2009 recession ended.

Obama's starting point for his manufacturing goal was 2009 exports of $1.57 trillion. Since then, they climbed to a record $2.19 trillion in 2012 — about 48 percent toward his goal of about $3.14 trillion by the start of 2015.

But 2012 exports, while a record, grew just 5.5 percent from those in 2011, down from a 15.9 percent surge from 2010 to 2011. The rate would have to pick up sharply again this year and next to meet Obama's target.

Some critics argue that Obama set the bar artificially low by using recessionary 2009 numbers as his starting point.

Alan Tonelson, an official with the U.S. Business and Industry Council, said Obama also "has the wrong goal" by focusing on exports and not the other part of the trade equation: still-huge import levels and resulting trade deficits.

The U.S. imported $540.4 billion more in goods and services last year than it exported, down only slightly from the $559.9 billion trade deficit in 2011.

Obama shrugs off such skepticism.

"Just as it's becoming more and more expensive to do business in places like China, America is getting more competitive," the president said during a recent visit to a flourishing engine-part factory in Asheville, N.C.

The U.S. now makes about 18 percent of the world's goods, down from nearly 40 percent right after World War II.

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