Analysis: Doubling U.S. exports remains a distant dream for Obama
WASHINGTON (Reuters) - U.S. President Barack Obama reminded the world on Thursday of the lofty goal set early in his presidency to double American exports over five years. It looks like he won't deliver.
Trade data published earlier in the day underscored the uphill battle faced by the administration. Weakness in the global economy is knocking down demand for U.S. exports, which rose just 3 percent in the 12 months through March.
At that pace, Obama's mission won't be accomplished until around 2024, nearly a decade later than promised.
"The president's export-doubling goal seems less achievable than ever," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a group that represents small American manufacturers
Unveiling his nominations of Mike Froman to be U.S. trade representative and Penny Pritzker to be commerce secretary on Thursday, Obama said one of their key tasks would be meeting the goal of raking in $3.14 trillion from sales abroad in 2015 - twice the 2009 level.
That seemed more plausible a year ago when exports were growing at about four times the current rate.
Now the global economy has taken a turn for the worse, with the euro zone mired in recession and even China posting slower rates of economic growth. In the first quarter of 2013, U.S. exports to the European Union fell 8 percent from a year earlier.
Also weighing against Obama's mission, other nations are ramping up efforts to print money in order re-inflate their economies, which has put upward pressure on the U.S. dollar.
Japan launched a bold monetary stimulus program in April to double its money supply, while the European Central Bank lowered interest rates on Thursday.
So far this year, the dollar has gained about 1.5 percent on a trade-weighted basis, which could cut into the competitiveness of U.S. exports.
Still, there are a number of factors that might boost exports over the long term. Persistently large U.S. trade deficits could return the dollar to the long-term weakening trend which began around 2002. A boom in U.S. energy industry could eventually lead to more exports of natural gas, and potentially even crude oil.
But analysts point out that the world's biggest economies are pressing forward with policies that tend to weaken their currencies, and it is not clear where that process will end. It also would take years to build the infrastructure and political will needed to significantly ramp up energy exports. The Obama administration so far has shied away from allowing unfettered exports of natural gas.
Add lackluster global economic growth to the mix, and all this suggests Obama will be hard pressed to meet his 2015 deadline.
"Unfortunately, I don't think we are going to make it," said Thomas Duesterberg, a manufacturing researcher at the Aspen Institute in Washington and a former assistant secretary at the Commerce Department.
A White House official acknowledged there was "more work to be done," but said progress was being made. "We'll continue to do everything we can to increase exports, promote growth and create jobs right here at home," the official said.
Obama set the export goal in 2010 when the United States was just emerging from its worst recession since the Great Depression. It wasn't the only ambitious target set early in his presidency. One month after taking office in 2009, Obama promised to halve the federal deficit in four years. That goal was frustrated by a persistently weak domestic economy.
As part of its trade push, the White House lately has stepped up efforts to open up overseas markets.
The administration notified Congress in April it will start free trade talks with Japan, part of America's efforts to push a major free-trade deal with Asian and Pacific nations. The United States and the European Union are also preparing to launch talks on a free trade pact.
Yet even if Obama strikes these deals to help U.S. exporters, it could be many more years before Americans notice there has been a big jump in exports.
Because Obama's target to double exports is measured in nominal terms and doesn't take into account inflation, stronger growth would be needed for companies and workers to feel twice as better off.
Duesterberg calculated in March that even if the Asia-Pacific and European trade deals go through, as well as a number of export-boosting scenarios like a reduction in corporate tax rates and a depreciation of the dollar, inflation-adjusted exports would probably not double until 2020.
"It will take time," he said.