As Deficit Declines, Small Businesses and Manufacturers Encouraged to Export
by Christina Lee on December 18th, 2008
While the U.S. current account deficit declined more than expected, efforts in promoting overseas exporting remains persistent among the government, economists, and industry experts.
The reason why: a trade deficit of more than $214 billion, which they say is more than enough evidence that the United States is still consuming more than it is producing.
The current account is the broadest measurement of global economic activity by the United States, as it incorporates investment flows with trade of goods and services. Its deficit current amounts to $174 billion, down 3.7 percent from $180.9 billion.
Peter Morici, a University of Maryland international business professor, believes that the trade deficit is almost entirely responsible for the current account deficit, and that cutting it in half would pull the country out of its recession.
“Every dollar spent on imports that is not matched by a dollar in exports reduces domestic demand and employment,” he wrote in Seeking Alpha.
The manufacturing sector in particular has suffered under the trade deficit, with a 1.6 percent decline in production last month and over 4 million jobs cut since 2000.
Over the years, the National Association of Manufacturers has watched domestically-centered manufacturers suffer as exporting-oriented manufacturers prosper, with a 17 percent growth in production since the end of 2005.
“If your company is not exporting, it needs to,” said Dan Akman, assistant vice president for marketing and business development, to World Trade Magazine on Dec. 3.
Meanwhile, the U.S. government continues to believe in the exporting potential of small and medium-sized businesses. In 2006, the International Trade Administration reported that such businesses exported $263 billion in revenue. To date, more than 250,000 of them are currently exporting, according to U.S. Secretary of Commerce Carlos Guitierrez.
“It’s especially important that our entrepreneurs and small business owners have the tools they need to take advantage of expanding international marketing opportunities,” he said at last month’s Small Business Administration’s International Trade Symposium.