This is the fourth in a five part series about the global economy

STATISTICS OF THE GLOBAL ECONOMY
By Bob Confer

Much banter regarding the pros and cons of a worldwide marketplace is based upon assumptions and wild accusations. Therefore, when attempting to separate fact from fiction it is important to bring statistical analysis into the fray. A problem exists, though, where some statistics that are far too random are thrown about. In many cases, numbers are twisted and turned giving only half the story and a disjointed snapshot that fits the needs of the person stating his side of the argument. Bad numbers are quoted in complete indifference to the good numbers, and vice versa.

A classic example of the fallacy of some statistics is the constant use of trade deficit values when looking at our role in the global economy. The most recent statistics from the US Census Bureau indicate that in November of 2005 we had a $64.2 billion imbalance with all of our trading partners, as we brought in $173.5 billion of goods and services while exporting $109.3 billion of the same. At first glance it appears disastrous for America, as incoming is 59% greater than outgoing. 

But, is it really that bad? Using trade balance as an analytical tool is flawed. It is a quasi-ethnocentric statistic when put in the wrong hands. It assumes that we (America) should be the most powerful economic entity in the world, and that our 298 million people should manufacture for and serve the other 6.2 billion people on this planet and, at the same time, consider their contributions of goods and services to be of no good to us. Is that fair? No. It is patriotism taken to the point of being greedy, if not spiteful of the rest of the world. 

To really see how our economy is doing – and it is doing quite well – one needs to take statistical analysis even further. More telling statistics can be found in the growth of exports and imports, Gross Domestic Product (GDP), employee compensation, and employment levels in America.

Though the gap has increased significantly between exports and imports, America’s exports have exploded in the very recent history. Between 1992 and 2004 (the numbers for 2005 are not yet available) our exports rose by a staggering 87%. So, exports are nearly double what they were only a dozen years earlier. This proves that, if anything, the global economy has made America considerably richer and has not hurt it in the least. With new markets and new consumers available as China’s and India’s middle classes continue to grow, there is no reason that this incredible growth of exports should not continue.

Even imports, too, prove how powerful America’s economy is. In that same time span, imports to the United States had grown to two and a half times what they were. That indicates that our consumers and private sector are all consuming goods and services at a nearly insatiable rate.

Such import growth could not occur in conjunction with our export growth were it not for higher levels of output within our nation’s private sector. The GDP, an indicator of  goods and services produced within our borders, has risen at annualized rates of 3 to 4% in just the past three years alone. This growth would naturally be considered robust, but when one adds to this that we were in a small global recession and have suffered the slings and arrows of terrorist attacks and damning natural disasters, this growth could be considered amazing. Such success bodes well for future growth.  

In order for all of the above to have occurred and to continue to occur, economic glory would manifest itself in higher employment and higher wage levels here in America, which it has. In the aforementioned twelve-year period the unemployment rate had gone from 7.5 to 5.5%. Considering that we’re a nation of nearly 300 million people that is some pretty significant job growth. In that same period, employee compensation – as an aggregation of wages and benefits – has increased by nearly a third per numbers supplied by the US Department of Labor.

The numbers shown here, as well as many others readily available, disprove common sentiment about the state of our Nation. We are led to believe by many in the media that the new global economy is hurting America, even killing it. Taking a step back, ignoring the hype, and looking at what’s really taking place prove that America is doing well –even thriving – in this global marketplace.