(Wall Street Journal Blogs – Ed Gershwin)
Sprechen Sie Trade?
When it comes to exports, the United States could learn something from Germany.
In the second quarter, Germany’s economy grew at a blistering annual rate of 9%, almost all of which was due to robust exports. In August, German manufacturing orders expanded by a healthy 3.4%, driven by strong foreign demand for products like Audis in China. America’s economy is four times larger than Germany’s, but Germans export more manufactured goods than us, and those exports account for over a third of Germany’s GDP.
Germany exports aggressively because it must. Unlike the United States, where private consumption fueled 70% of our economy in pre-crisis years, Germany’s famously frugal consumers contribute only 57%. Germans can only prosper if exports fill the gap.
But after being battered by recession, America’s consumers are now almost Germanic – saving more and spending less. Economists estimate that, over the next several years, the private sector share of U.S. GDP will remain about three percentage points below 2003-07 levels.
President Obama is wisely seeking to close this gap – and to create good American jobs – by doubling U.S. exports, but there are no magic formulas for doing this. So, as it pursues this vital goal, America might ask: “What would Dieter do?” Read more here.