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.
