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Declining U.S. Exports Based on Rising U.S. Dollar - 2/22/16

Recently released government statistics indicate that U.S. exports shrank last year for the first time since the Great Recession.  U.S. sales abroad fell five percent in twenty fifteen.  The falloff in global sales is at least partially a reflection of the fragile state of the global economy.  Poor global growth has produced weaker demand for American cars, computers, smartphones and other items. 

But as indicated by CNNMoney among others, a more significant factor is the rise of the U.S. dollar.  The dollar’s meteoric rise has rendered American goods more expensive to foreign buyers.  Late last year, the dollar surged to a thirteen-year high against a basket of rival currencies.

The dollar rose nine percent against that basket of currencies last year alone.  The dollar’s strength has proven to be a major headwind to globally oriented companies ranging from Johnson & Johnson to Ralph Lauren.  Declining exports are serving to mask ongoing growth in other parts of the economy. 

Last year, consumer spending rose more than three percent, in large measure because of a stronger job market.  Residential construction rose by nearly nine percent.  Global growth will continue to be weak in twenty sixteen, implying that exports will continue to sag.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.