Did US Exports Surpass China In 2012?

This Great Graphic was posted on Business Insider by Lisa Mahapatra. It shows the destination of US exports in 2012, based on the US Department of Commerce data.

There are two facts that Ms. Mahapatra brings to our attention. First, according the Commerce Department, the dollar value of US exports rose sharply last year to $2 2 trillion. Second, US exports appear to have surpassed Chinese exports, which the Chinese government estimates at $2.05 trillion.

Thirty five of the fifty US states reported an increase in goods exports and 29 of them reported record goods exports. Capital goods and industrial supplies tend to be the two largest export categories, followed by consumer goods, automotive, food and beverages and petroleum products.

The Federal Reserve's broad trade weighted measure of the dollar gained a little more than 2% in 2012, using a 12-month moving average. Of course there are large lags between prices of financial variables, such as exchange rates and the price of goods and services.

The Commerce Department said that US exports supported 9.8 mln jobs in 2012, an 1.3 mln increase since 2009. The Obama Administration goal is to add two million export jobs by the end of 2014. The Commerce Department observes that US export growth to countries that the US has a trade agreement in place doubled export growth to other countries by a 2 to 1 margin.

At the same time, when thinking about how the US services foreign demand, don't forget that exports pale in comparison producing locally and selling locally. For numerous reasons out the scope of this note, US companies have pursued a direct investment expansion strategy over an export-oriented model, which is more common for both advanced industrialized countries, such as Germany, Switzerland, Finland and Sweden, as well as developing countries such as China, Korea, Taiwan and Singapore.

While it is tempting to include Japan among the export-oriented strategies, it is not as a valid as it was in the past. Since the late 1990s, the Ministry of Finance data suggest sales by affiliates of Japanese companies exceed exports.

The US reports January's trade figures on Thursday. The consensus is for a widening of the deficit to almost $43 bln from $38.5 in December. The average nominal monthly trade deficit in 2012 was $45 bln and in Q4 it averaged $43.1 bln. In December, record petroleum exports helped reduce the US trade deficit to the smallest in three years.

For GDP calculations, one has to adjust for changes in prices. In real terms, the trade deficit narrowed to $44.1 bln, the smallest in six months from $51.8 bln in November. The monthly average real trade deficit in Q4 was $47.31 bln, which is about $50 mln less than the 12-month average. The real January trade deficit is likely to be smaller than the Dec reading, giving some hope that external demand will be a net contributor to Q1 GDP.