Can the U.S. economy thrive while others dive? The answer used to be “of course.” Now it’s “maybe.” The U.S. now depends more on what happens abroad because exports account for a bigger share of total U.S. output. If other countries can’t afford to buy U.S. exports, then jobs in export-oriented businesses are at risk.
This chart shows the change. In the 1960s, exports accounted for only about 5 percent of U.S. gross domestic product. The vast majority of what Americans produced was sold inside the country. Exports’ share of the economy has been rising, though. It has reached a new high since the 2008-09 financial crisis and has been bobbling around 13.5 percent for the past three years.
Forecaster David Levy of the Jerome Levy Forecasting Center cites America’s rising export dependence in saying that there’s a 65 percent chance of a worldwide recession forcing a contraction in the U.S. by the end of 2015, Bloomberg News reports today.
Mohamed El-Erian, a Bloomberg View columnist and chief economic adviser to Allianz, isn’t as pessimistic in an interview that appears in Bloomberg Businessweek’s special issue on the 2015 outlook. Here’s what El-Erian told Sheelah Kolhatkar:
The U.S. can continue to improve, but can we lift off, can we attain escape velocity when the rest of the world is challenged? That’s much harder. We control our destiny, but we’re talking about 2.5 percent to 3 percent growth. If we want more, and we certainly need more, then we need the rest of world to go from providing head winds to providing some tail winds. And then the potential is huge.