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The U.S. goes global

Trade data for December was somewhat better than expected. This, combined with stronger data on construction and inventories, will likely boost Q4/12 GDP from -0.1% to a small positive gain.  

But stepping back from the recent numbers, what stands out to me is the incredible progress that the U.S. economy has made in the past 20 years on the international trade front. In 1992, imports and exports of goods and services both represented about 7-8% of GDP. Since that time, exports have grown to over 13% of GDP, and imports to over 16% of GDP. Exports, in other words, have grown 75% more than GDP, and imports have more than doubled relative to GDP.

The U.S. economy is finally becoming globalized, like most of the world's other major economies. The growth of international trade is an unqualified good thing, for us and for the rest of the world. It makes economies more efficient and boosts standards of living everywhere. The more the better. This is one of the reasons why it doesn't pay to underestimate the ability of the U.S. economy to overcome adversity.

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