Export Boom Helps Farms, but not American Factories

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Export Boom Helps Farms, but not American Factories

By: TraderMark Tuesday, August 19, 2008 11:57 AM

Sectors: Aerospace , Consumer Staples , Industrial Products
Symbols: BA, CAT, NYT

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Ah, the weak dollar has led to the great American manufacturing export economy - well not so much

Exports are the bright spot this year in an otherwise bleak economy. But the world is not suddenly snapping up made-in-America goods like aircraft, machinery and staplers. The great attraction is decidedly low-luster commodities like corn, wheat, ore and scrap metal. (let's cheer that US Multinationals have not found a way to outsource these products - at least we have something left that others in the world want to buy)
This helps explain why manufacturing jobs are continuing to disappear by the tens of thousands and factories are closing even during a miniboom in exports. While the surge in commodities is a welcome relief, it is an unreliable prop for an industrial power.
“The historical data tell us clearly: don’t get too used to commodity export booms; as any third world country will tell you, they tend to go away pretty quickly,” said L. Josh Bivens, a trade expert at the labor-oriented Economic Policy Institute. His point was that while Boeing’s aircraft or Caterpillar’s tractors are distinctive and sought after, corn grown in Iowa is virtually interchangeable with corn grown in Argentina or any other bread-basket country. “Over a long period,” Mr. Bivens said, “commodities contribute right around zero to export growth.” (easy now, let us have some bright spots in the morbid economy)
An analysis of trade data by the federal Bureau of Economic Analysis illustrates just how lopsided the gains have been between manufactured goods and unprocessed commodities. All exports of goods and services in the first half of the year rose at a $52 billion annual rate, adjusted for inflation, up 7.1 percent.

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