I pointed out that up through the third quarter of 2007 rising exports had roughly offset the impact of the housing bust.....
So did the U.S. economy dodge a bullet?
Yes, it did — which is why I haven’t been as sure about a looming recession as, say, Larry Summers or Marty Feldstein, let alone Nouriel Roubini. (No, I’m not always a doom and gloom guy — only when the situation warrants, which has been pretty often lately.)
While we dodged a bullet, however, there are between one and three more bullets headed our way.....
I am wondering if he is positing a point of hope that has little practical reality as I am musing that an export led recession buster would still feel like a significant recession on the employment and wage front even if GDP growth never goes negative for a quarter or the official recession line of two quarters. Exports are still overwhelmingly goods as the US service economy is a local economy. The goods that are produced are either manufactured goods, raw materials or agricultural products, and here we have a real divergence in productivity. And this is why I think a 'mild' recession won't feel like one to anyone who works for a living.
The Bureau of Economic Analysis has the composition of US exports here, and as you can see over the past twenty years, there is a mild downslope of goods to total US exports, however this is a matter of two points; real, especially when viewed within the context of a larger export share of the US economy, but mild.
Over the last couple of years once we got back to trend performance instead of the job-loss and jobless recovery, a significant chunk of the employment gains came through the housing and construction booms; either directly by increased employment in the building trades, assessors, appraisers, mortgage processors etc, or indirectly through the multiplier effect jobs and localized services fueled by people buying new appliances, new rugs, and new cars through the wealth effect of seeing their home values increase. A good chunk of these people will need to find new jobs as this sector of the economy has and will continue to be punched in the groin for a while longer.
Some of the economic activity transfer has occurred already as Dr. Krugman noted, US exports are up and have taken a good chunk of the GDP slack. However on a short to intermediate employment term, this is bad news for most workers as the primary export sector (good production) is way more productive than the general US economy; via the Bureau of Labor Statistics is the index of output per hour, with 1992=100 for manufacturing and business in general:
Since manufacturing productivity has grown faster than business productivty over the past twenty years, the shift of a dollar of GDP from business expenditures to manufacturing expenditures means we are getting far less employment for the buck than we would have gotten twenty years ago. The productivity gap is fairly significant between the sectors, and the growth rates are still divergent in favor of manufacturing.
So even if we are able to dodge a technical recession on the basis of increased exports, and assuming that goods still constitute roughly 70% of US goods and services exports, then we can still see a fairly significant jobs, wages and waiting time for employment recession type environment.