Our Gross Domestic Product (GDP) grew by 2.5% in the first quarter of 2013, slower than expected. Some expect GDP growth will drop to 1.5% by year end. At the end of the first quarter, 11.7 million workers were unemployed and another 7.6 million were working part time because that’s all they could find. For workers and consumers, the outlook is disappointing.
GDP growth is the hoped-for solution to cure our economic ills because it connotes constructive progress. Growth in GDP can come from additional employment and it can also accelerate employment gains. When employers need additional workers or need additional hours to be worked by existing employees, wages and GDP increase. When there is high demand for people with special skills, their wages and GDP can rise. When output per worker rises, GDP and productivity rise. When GDP rises — so do tax revenues.
Sustainable increases in GDP are caused by persisting increases in demand for an employer’s products and services. Increased goods and services exports are a traditional way to boost both employment and GDP. The U.S. exports more than $2 trillion in goods and half a trillion in services each year – and much of this trade is in technically advanced products.
Select U.S. Goods Exports, 2012
|Industrial supplies & materials|
|Food, feeds, & beverages|
|Fuels & lubricants|
|Chemicals, excluding medicines|
|Civilian aircraft, engines|
|Computers, peripherals, and semi-conductors|
The forthcoming bright spots in our economy are expected to be: increases in fossil fuel extraction, expansion of medical products and services, efficiencies in marketing and retailing due to “big data,” and eventually, restoration of residential construction. Construction is difficult to export, but elements of the others could freshen up the U.S. exports smorgasbord. And there is an opportunity to improve our exports to the European Union (EU), already a major trading partner with the U.S.
A free trade zone with the EU is being discussed. That would establish a preferential treatment for U.S. goods and services in a cluster of well-heeled countries with cultural norms similar to our own. The usual handwringing over competing against dollar-an-hour labor does not apply here, since EU workers are very well paid and many EU members hobbled their competitiveness with regulations that make it difficult to remove non-performing workers. Some EU members make regulatory conformance a full time job for business owners. We have a chance to be nimble, productive, and cost competitive in a great market. We owe it to the 19.3 million unemployed and underemployed U.S. workers to consider this opportunity quickly and carefully.
Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research