Originally Published in eFlourishing Issue 8, March 16, 2010
We hear our friends say, “The US doesn’t make anything here anymore!”
But we do. Last Thursday, the Commerce Department announced that as a percentage (39%) of the growth in our Gross Domestic Product (5.9% in 4Q2009), goods exported from the US hit a thirteen-year high in 4Q2009. But wait! That’s not the good news, which is that the US is still – far and away – the number one manufacturer in the world, producing more than 20% of global output in 2009. China was number two at 12%, Japan was number three at 10%, Germany was number four at 7%, and no other country contributed more than 4% of global manufacturing output. (All data from “Made in America”, LPL Weekly Market Commentary by Jeffrey Kleintop dated March 15, 2010)
Just look at what we produce. While China produces toys and Japan produces cameras, the US produces and exports technical and machine tools, medical equipment, computer software, pharmaceuticals, commercial airplanes, defense products, satellites, and myriad other high-value-per-unit products.
Let others have their cheap labor. These high-value-per unit products tell us that our most important comparative advantages are a prodigious pool of intellectual talent and an ocean of invested capital – each the result of two hundred years under a (relatively free) capitalist system. Our comparative advantages are not easily duplicated. I believe our greatest threats are not overseas sweat shops and call centers, but restrictions of free trade and government-enforced price controls. Sorry; I do digress.
Old Europe and Japan are stuck in the muck of semi-socialism, as fourth quarter annualized Gross Domestic Product was less than 1%. Will they ever learn? More than 50% of US exports go to emerging markets. Yes, China is an emerging market, but so are Brazil and India. Those are among the many countries we sell to that are experiencing high economic growth rates. We do want prosperous customers, do we not? (All data from “Made in America”, LPL Weekly Market Commentary by Jeffrey Kleintop, CFA dated March 15, 2010)
Here is the best news for investors: The S&P 500 companies derive more than 40% of their revenue from global markets. (“Made in America”, LPL Weekly Market Commentary by Jeffrey Kleintop, CFA date March 15, 2010) According to LPL Research, American business sectors with the highest rate of export-driven sales are – not surprisingly – Information Technology, Industrials, Materials, and Energy.
Despite Europe’s problems and our own currently high unemployment rate, The Global Capitalist Revolution is still growing – and in the long run – I feel it cannot be stopped. In my opinion, American manufacturing will remain an important contributor to worldwide economic progress and rising living standards for American workers.