We hear a lot about our country’s insatiable appetite for foreign-made goods. However, it is easy to forget that our trading partners also have an increasing appetite for American-made durable goods (where "durable goods" includes such things as computers, furniture, aircraft, machinery, ....). In fact, over the past decade, a growing share of our manufactured goods has been heading overseas. Although the worldwide recession temporarily reversed this trend in 2009, exports rebounded strongly last year and accounted for roughly half of the overall growth in durable goods shipments.
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As the figure above highlights, exports accounted for about 16 percent of shipments in the early 2000s, and by 2010, that figure increased to nearly 22 percent. We should note that export figures typically show the value of goods at their U.S. port of export, and include not only the cost of the widgets but also insurance, transport, and other charges incurred in placing the widgets alongside the carrier at the port. Estimates show that in 2008, these costs represented about 12.8 percent of the export value of manufactured goods, and so we adjust the published figures on durable goods exports accordingly.
While durable goods exports as a whole rose 17 percent from 2009 to 2010, exports to many key trading partners climbed at an even faster rate. Consider China and Brazil. Durable goods exports to China surged by nearly one-third or $10.8 billion, while durable goods exports to Brazil increased by 23 percent or $3.8 billion. Both countries have increased their purchases of the whole gamut of U.S. durable goods, and these sales are translating into U.S. jobs. Jobs at domestic factories that produce durable goods have increased by 223,000 over the past year thanks to our sales abroad.
Between 2009 and 2010 an additional $8.7 billion of transportation equipment, machinery, and computer and electronic equipment with the “Made in U.S.A.” label left our ports for China. Because these industries account for four-fifths of durable goods exports to China, it is natural for them to account for the bulk of the growth as well. Yet, exports of primary metals, electrical equipment, fabricated metal products, and wood products - while relatively small in dollar value - also grew significantly in 2010. The $46 million increase in furniture exports is the smallest on this list, but it also represents the fastest growing durable goods sector, with a 65 percent spike in exports from 2009 to 2010.
Given these trends, the fact that exports orders have been growing for 20 consecutive months (according to the Institute of Supply Management [4]) bodes well for our manufacturing industry, trade balance, and most importantly U.S. jobs.
~Mark Doms, Chief Economist, U.S. Department of Commerce
March 22, 2011
