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The Outlook for U.S. Exports Yet Again
Tue, Dec 2 2008, 10:40 GMT
by Jay Bryson
Executive Summary
The intensification of the global credit crunch since mid-September has led to a significant deterioration in the outlook for global economic growth next year. Consequently, the outlook for U.S. exports, which helped to prop up U.S. GDP growth earlier this year, has darkened, and an overall decline in U.S. exports next year now seems likely.
There will be differential effects on individual companies depending on industry and export destination. Economic theory predicts and history shows that investment spending typically exhibits wide fluctuations over the cycle, so it seems reasonable to expect significant declines in capital goods exports in 2009. Exports of other cyclically sensitive goods, such as industrial supplies and materials and autos, should also weaken. However, exports of goods that are not very sensitive to the cycle, such as non-discretionary consumer goods and agricultural products, probably will fare relatively better.
Exchange rates will also play a role in determining export prospects next year. In that regard, American exports to Europe should be more at risk than exports to Asia because the dollar has generally strengthened more vis-à-vis European currencies than against Asian currencies.
Published on Tue, Dec 2 2008, 10:40 GMT
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