Turnaround on International Trade

The Small Business & Entrepreneurship Council contends recent developments in international trade are actually promising for the U.S., despite a decline in recent years:

Two stories are to be found in the latest trade numbers issued by the U.S. Bureau of Economic Analysis. One is bad. The other offers hope.

The first story is about a historic decline in trade for 2009 overall. U.S. exports decline by 15 percent – from $1.83 trillion in 2008 to $1.55 trillion in 2009. The story on imports was even more striking – a 23 percent decline from $2.52 trillion in 2008 to $1.93 trillion in 2009.

These trade numbers go along with the reality that the U.S. economy in 2009 experienced its sharpest one-year decline in more than six decades.

The second story is that this dramatic decline in trade, which specifically ran from July 2008 through May 2009, has since reversed course. Exports hit bottom in April, and subsequently climbed for eight straight months. Meanwhile, imports bottomed in May, and have increased in six of the past seven months, including for four consecutive months.

Export and import levels have still not climbed back to where they were in mid-2008, but exports (seasonally adjusted) were up by 17 percent in December 2009 versus April 2009, and imports were up by 23 percent from May to December.

Again, it is important to understand that rising imports mean expanded sales by and opportunities for U.S. firms, while increasing imports signals at least some life in the domestic economy, that is, consumers and businesses are buying more imported consumer and capital goods and services.

If you’re an optimist seeking hopeful signs in this tough economy and harsh policy climate, then trade is the place to look. Now all we need is for the President to follow up with his pro-trade rhetoric in the State of the Union with pro-trade policy actions.