Record Exports Driving Economic Growth

Excerpt from Alliance Bernstein's US Weekly Economic Update, 8/15/08.

US exports are an integral part of the economic growth story and have scaled new heights almost every month during the first half of 2008. Real merchandise exports rose 4% to $93.6 billion in June, the fifth record month this year. Over the past year, real exports of goods increased 13.4%, outstripping four years of gains that averaged about 9% per annum.

The long cycle has lifted exports to a level not seen for several years. US real exports of merchandise products now equal business spending on equipment and software and are 50% greater than real private construction spending (including nonresidential buildings and housing construction projects) (Display 1). Exports have not reached the same scale as business capital spending since 1997, while in 2003 exports were at the same level of construction spending. In addition, US real exports now equal about one-third of real manufacturing sales— double the share of the mid-1990s.

...

Our calculations show that the value of emerging markets economies exceeded $10 trillion in 2007, or twice the size of 2000. In addition, real trend growth in the emerging markets is estimated to be around 5%, or least double that of many of developed trading partners. US companies have never enjoyed the luxury of selling into such a large and fast-growing market at such a favorable exchange rate. As a result, US firms are expected to increase their share of these markets and even post record gains in slower growing markets given their much improved competitive position brought about by the weak dollar.