President Obama has vowed to double U.S. exports within the next five years. That's because exports are critical for rebooting the American economy. It's clear American consumers can't get the economy going on their own. They can't restart the jobs machine. They've run out of money and credit.
It's not just that one out of four Americans is unemployed or underemployed (working part-time, overqualified or at a lower wage than before). More significantly, the Great Recession burst the housing bubble that had let American consumers turn their homes into ATMs. Now the cash machines are closed.
So the administration figures foreign consumers will have to fill the gap.
Problem is, most other economies also relied on American consumers. Remember the trade gap? Americans used to be the world's biggest and most reliable customers -- sucking in high-tech gadgets assembled in
With American consumers pulling back, these other economies have also been slowing down. Their unemployment is rising.
I recently attended a conference with global business executives. When I asked them where they expected to find new customers to replace Americans who are pulling back, they all said
As of now,
Yes, global companies will do wonderfully well.
Meanwhile, the productive capacities of
This means Obama and others won't easily find the export markets they need to create enough jobs to make up for the vanishing American consumer.
When the world's productive capacities exceed the buying power of the world's consumers, every government wants to increase exports and discourage imports. That spells trade war.
Two weeks ago, the representatives of the world's 20 biggest economies vowed to slash their budget deficits by half by 2013. The result will be even less domestic demand and even more pressure to export in order to avoid higher joblessness.
We're unlikely to see a repeat of the disastrous Smoot-Hawley tariffs that worsened and lengthened the Great Depression. But you can forget trade-opening agreements. In
And watch out for under-the-radar protectionist moves. Since the start of 2008, when the Great Recession began, countries around the world have already imposed at least 443 measures to block imports, according to the
This is just the start.
- The Vanishing American Consumer and the Coming Trade War
- Why the Economy Isn't Quite as Bad as It Seems
- 6 Reasons the Housing Market Hasn't Recovered
- Why Everyone Suffers When Job Seekers Give Up
- Depressed About The Economy? Maybe Because You're Earning Less
- Obama's Anti-Business Policies Are Our Economic Katrina
- Republicans' Aversion to Financial Reform Misguided
- Slouching Toward a Double Dip or Lousy Recovery at Best
- 8 Problems That Could Trigger a Double-Dip Recession
- Why Congress Cannot Afford Not to Extend Unemployment Benefits
- Distressed Home Sales to Sandbag Housing Revival
- Home Sales Poised to Drop in Coming Months
- The Economy's Lasting Impact on Your Retirement
- Forget Obama - Fear the Real State Capitalists
- Imperative Need for America to Become an Innovation Nation
- Jobs Bill a Tough Call for Democrats
- What Soldiers at War Can Teach Us About Surviving Financial Warfare
- 5 Things to Know About the Newest Jobs Bill
- New Home Sales Plummet to Record Low
- The Housing Market's Unexpected Drop
- When Obama Trades Jobs for a Higher Priority
- When National Politics and Home-State Economics Collide
- Reasons -- and Ways -- to Splurge This Summer
- What China's Currency Reform Means For Investors
- The Democrats' Economic Vision Problem
- Urban Abandonment
- Coping With China's Financial Power
- Is the Recession Over?
- Managing Debt Remains Key in Face of An Uncertain Economy
- Home Repossessions Hit New Record High
- 2010 Elections Will Turn on Jobs and the Economy
- Chamber of Commerce Aims to Boost Trade With China
- America Has Two Sets of Rules
- Why May Jobs Report is Better and Worse Than it Looks
- Jobless Economic Recovery Remains Issue Number One
- What Financial Reform Means For Consumers
- Financial Reform Legislation Gives Shareholders More Say
- Financial Reform: Win for Wall Street - Cold Shoulder for Main Street
- Fiduciary Provision May Be Most Important Part of Financial Reform Bill
- Unfair Trade Practices Are Wiping Out Jobs
- In a Welfare State How Much Is 'Enough'?
- Should Investors Sit This One Out?
- Why Jobless Teens May Have More to Blame Than the Recession
- What Home Sales Jump Means for Economic Recovery
- Home Prices Have Further to Fall: Here's Why
- Why Housing is Headed for Second-Half Headaches
- Nancy Pelosi Will Lead America to National Ruin
- Financial Reform's Uncertain Promise
- The Way We're Working Isn't Working
- What Gold Can and Cannot Do For You
- Why Some Women Skirt the Wage Gap
- The Crippling Price of Public Employee Unions
- European Union Funding Proposal Is Only the Beginning
- Why Wall Street's Gain Has Been America's Loss
- Euro Crisis has American Fingerprints
- Wall Street Probes: Collateralized Debt Obligations
- Voters See Debt Crisis. Why Doesn't Washington?
- Social Security Inflation Adjustment Debate
- European Debt Crisis Affects Investments
- Greece: Model of Socialistic Excess
- Who Got Hit Worst in the Market Crash
- Expeditionary Economics: Spurring Growth After Conflicts and Disasters
- Why More Diplomacy Won't Keep the Financial System Safe
- Muddling through Greece's Tremors
- Greece Financial Crisis Raises Doubts About European Union
- Bigger Is Better: Case for Transatlantic Economic Union
- European Union: A Fragile Partnership
- Goldman Sachs Testimony Boost for Financial Reform
- A Culture of Criminality on Wall Street
- Greek Debt Crisis May Hurt Latin America Economy
- Why April's Unemployment Rise Shows Workers Hopeful Again
- Smart Moves for Tomorrow's Higher Interest Rates
- Still the Optimist
- The Global Glass Ceiling: Why Empowering Women Is Good for Business
- Life in the Age of 'Much Worse Than We Thought It Would Be'
- What 3.2 Percent GDP Growth Says About Our Contradictory Economy
- Congress Had a Role in the Financial Crisis
- Just a Few Questions for the SEC
- Financial Crisis - Somebody Must Pay!
- Is Latin America Booming? Not Quite Yet
- Guns vs. Butter 2010
- Your Guide to the Goldman Sachs Lawsuit
- Can SEC Beat Goldman Sachs?
- Time to Break up the Big Banks
- Resisting Wall Street Reform
- Shorting The Middle Class: The Real Wall Street Crime
- Obama Edge on Financial Reform
- 10 Cities Facing Double Whammy of Default Risks
- Capitalism vs. Capitalists
- Business Schools' Great Ethics Debate
The Vanishing American Consumer and the Coming Trade War
(c) 2010 Robert Reich