Positive Trends on Trade?

When looking at monthly trade data, it is not the trade balance that matters. Instead, it's the trend on both exports and imports.

Namely, if both are growing, that's good news for the economy. Rising exports means expanding opportunities for U.S. enterprises and workers. Meanwhile, increasing imports is not an economic negative; instead, import growth generally reflects a growing domestic economy.

The latest trade data released from the U.S. Bureau of Economic Analysis on March 9 shows positives in terms of both exports and imports.

Exports rose in January, and that made for the second consecutive month of growth after two months of declines.

As for imports, they also rose in January for the third straight increase after a roller-coaster up and down ride for nine months.

Many uncertainties remain on the trade front, including European economic woes, questions swirling around the Middle East, the possibility of slower growth in China, and a lack of vision and leadership on free trade from the Obama administration.

The hope is that the recent months of growth in trade will develop into a substantive trend. That would be good news for the small businesses that account for more than 97 percent of U.S. exporters. Of course, it would help a great deal if the U.S. would get back to a serious effort at reducing governmental obstacles to trade, so that opportunities can expand.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.

Free Trade Makes a Comeback

An April 2008 Pew Research poll raised a big concern about free trade falling out of favor with many Americans. But recent polls show a bounce back in favor of free trade.

Pew asked: “In general, do you think that free trade agreements like NAFTA, and the policies of the World Trade Organization, have been a good thing or bad thing for the United States?”

From 1997 to 2006, the “good ” response ranged between 44% and 49% -- but for one dip in December 2003 to 34%. The “bad” response ranged between 29% and 35% over this period. However, in November 2007, “good” and “bad” tied at 40%, and in April 2008, “good” came in at 35% and “bad” at 48%.

Fortunately, the new April 2009 survey reversed course away from anti-free trade views – with “good thing” climbing to 44% and “bad thing” falling to 35%.

Other polls on topic of trade experienced similar recent reversals. A CNN/Opinion Research April 2009 poll on whether foreign trade was more an opportunity through increased U.S. exports or a threat from imports (we’ll ignore the economic ignorance underlying the import aspect of this question) found 56% saying “opportunity” versus 40% saying “threat.” In June 2008, it was 51% “threat” and 41% “opportunity.”

And a CBS News/New York Times poll asked if trade with other countries was good or bad for the U.S. economy. In March 2008, 58% said “good,” and 32% “bad.” In April 2009, “good” climbed even higher to 66%, with “bad” falling to 23%.

These are positive signs for trade and our economy. Now, it’s time for the White House and Congress to shift from muddled or even protectionist leanings on trade to getting back to advancing free trade.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council