The best news for the shipping and trading economy didn’t come in the broad industrial numbers that suggest a recovery is approaching or in the jolt U.S. automobile sales got from the Cash for Clunkers program.
For more lasting impact, we’ll look to the White House order this month of a full-scale review of export controls across all government agencies with the goal of rewriting the rickety structure of disparate regulations that’s built up over the years.
We say that fully aware that this may follow down the well-worn path of other major regulatory reviews that started with big ambitions but ended up being buried in the bureaucracy.
But in this case, the stated am-bition may be critical because it suggests the Obama administration has a clear view not only that trade is a pillar of the U.S. economy — that’s a no-brainer, after all — but also that the export business that has been operating in the shadow of the consumption-led import world will be a necessary part of a strong and lasting economic recovery.
Exports were one important reason the U.S. economy contracted only 1 percent in the second quarter after a 6.4 percent decline in GDP in the first quarter, and they’re showing up as a major component of improving economic reports worldwide.
Japan’s 0.9 percent economic growth in the second quarter, the first growth after five straight quarters of decline, came on the strength of a 6.3 percent increase in exports. Germany’s economy grew 0.3 percent, the first growth there in more than a year, and the expansion also was built on improvement in exports.
And there is good news developing in the U.S. exporting economy.
While the Institute of Supply Management’s closely watched manufacturing index has shown gradual improvement in its overall numbers, a closer look at the segments that make up manufacturing showed new export orders moving solidly into positive territory in July for the first time since last fall. That, says ISM economist Norbert J. Ore, suggests “the global economy is recovering.” It also suggests the U.S. economy may be recovering in an important way.
The country’s economic bubble that finally burst over the past year was built on a series of financial in-struments — the credit default swaps and other notorious levers of wealth creation — that had grown far too remote from the reality of tangible goods and real services.
Now, the stimulus funds flowing from Beijing, Tokyo and Berlin are aimed at pumping up consumption and, by extension, production. And it appears the stimulus spending in the United States, along with the growing auto production fed by Cash for Clunkers, is helping cap job losses and prompt more economic activity — the sort associated with building and selling.
The best thing the administration can do for the economy is make sure attention to the export trade goes beyond a mere review of export controls and becomes an active and concerted effort to foster the trade, and the manufacturing production, that makes short-term stimulus actions unnecessary.
Paul Page is editorial director of The Journal of Commerce. He can be contacted at 202-355-1170, or at email@example.com.