"Fears that an economic slowdown overseas will curtail growth in U. S. exports and thus impede an upturn in the economy later this year are exaggerated," argues Maury Harris of PaineWebber Inc.
Harris points out that the trade-weighted dollar declined by about 10% in 1990, and econometric research indicates that each percentage-point drop in the exchange-rate value of the dollar boosts real merchandise exports by about a percentage point over a two-year period. Similar studies indicate that each percentage-point drop in foreign growth lowers real U. S. exports by a full percentage point over a year.
Thus, "if such research is reasonably accurate," says Harris, "it would take an implausibly large five-percentage-point drop in foreign growth to fully offset the stimulative effect of last year's dollar decline on exports." Recently, the Organization for Economic Cooperation & Development projected that real growth among its members, excluding the U. S., would decelerate by a little more than a percentage point, from 3.7% in 1990 to 2.5% in 1991.