The Present State of the US Economy
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Last Tuesday February 16, the AmCham editor attended a lecture given by Howard Rosen, resident visiting fellow of the Peterson Institute for International Economics. Formerly called the Institute for International Economics in its first 25 years (up to 2006), the Peterson Institute is a private, nonprofit, nonpartisan research institute devoted to the study of international economic policy. |
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The lecture was given in the offices of the WestHolland Foreign Investment Agency in The Hague. Howard Rosen spoke on the present state of the US economy. His lecture focused on the importance of exports for the US economy's recovery. Rosen - back on December 9, 2009 - had testified to the Senate Finance Committee Subcommittee on International Trade arguing for stimulating US exports as essential for the US to reduce its reliance on foreign capital without jeopardizing the living standards of American workers and their families.
Although US exports of goods and services have grown on average by 10 percent each year over the last 50 years, they currently constitute only a little more than 10 percent of GDP, considerably less than the world average. By contrast, exports of goods and services are 40 percent of GDP in Europe, 40 percent of GDP in China, 36 percent of GDP in Canada, 22 percent of GDP in India, and 16 percent of GDP in Japan.
For decades Americans have been consuming more than they produce. As a result the country has incurred enormous debt to itself and to the rest of the world. Rosen concluded that the recent financial crisis and deep recession provide clear evidence that the United States is not an economic island, and that continuing to increase US national and international debt places the country's living standards and the world economy at great risk. The current situation is not sustainable, according to Rosen. The seeds for the next financial crisis are already being planted.
For Rosen's full testimony to the Senate Finance Committee Subcommittee on International Trade see: http://www.iie.com/publications/papers/rosen1209.pdf It's a very readable succinct nontechnical document - suitably dumbed down for the Senators - with illustrative charts and graphs, including industry sectors he calculates are competitive internationally.
Just a few weeks after Rosen's testimony, President Obama announced initiatives to double US exports over the next five years. And put pressure on China to do something about the yuan's exchange rate. The Middle Kingdom clearly manipulates its exchange rate to maintain a trade advantage for its exports.
Rosen must have smiled with satisfaction with such a prompt result to his appeal.
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