ShopFloor.org: Trade keeps economy going

From Dave Huether at ShopFloor.org:

How, you may ask, could the economy still have increased in Q2 if consumer spending (which accounts for 70 percent of the economy) didn’t grow, especially given the fact that gross private domestic investment (housing, capital investment and inventories) fell by 15 percent (annual rate) in the second quarter?

The one word answer to this question is: Trade.

That’s right. Trade, the proverbial whipping boy of those who believe that American manufacturers (who are the most productive workers in the world) cannot compete in the global market, is keeping the economy in the black.

By itself, trade (exports-imports) contributed 2.42 percentage points to GDP growth in the second quarter-the largest contribution to GDP growth from trade in 28 years (3rd quarter of 1980.) In fact, trade’s positive contribution to economic growth last quarter was roughly 4 times the magnitude as the negative impact from the decline in residential investment.