Thursday, July 14, 2011

California Exporters Shine Through Glum Economic Landscape

Despite growing concerns that the plodding and anemic economic recovery may be stagnating, California exporters in May posted their 19th consecutive month of healthy year-over-year gains.

May shipments by state exporters totaled $13.20 billion, a gain of 10.5 percent over the $11.95 billion reported in May of last year, according to an analysis by Beacon Economics of the most recent monthly foreign trade data released by the US Commerce Department.

California's manufactured exports were up by 6.1 percent in May, while non-manufactured exports such as raw materials and agricultural products jumped 24.2 percent. Re-exports, those goods brought into the US and then shipped out again such as through a Foreign Trade Zone, also posted a strong 17.2 percent increase over re-export numbers in May of last year.

"Adjusting for inflation, California’s export trade is as robust as it was prior to the recession,” Beacon Economics’ International Trade Adviser Jock O’Connell said.
Beacon Economics Founding Partner Christopher Thornberg explained that export activity is a key component of both the US and California recovery.

"We opened up a huge deficit in the boom years," Thornberg said. "To get back on solid footing, exports need to continue to rise."

Looking forward, the Beacon Economics analysis forecasts sustained growth in California’s export trade, particularly in the second half of the year when the pace of foreign trade normally picks up.

"With the dollar as cheap as it is, California as well as other US goods are selling at bargain prices on the world market," O'Connell said.

In addition, the recent reprieve from steadily rising oil prices should help exporters, O'Connell said, by keeping transportation costs in check at least through the summer.

Even as most of the state's chief international trading partners are taking steps to battle inflation or curtail budget deficits, Beacon Economics is forecasting that those foreign economies will continue to grow and continue to draw in imports from California.

On the import side of the ledger, the value of foreign shipments entering the US via California's airports, seaports, and border crossings rose by 14.7 percent compared to May, 2010.

As the nation’s primary gateway to the Pacific Rim, California derives ample economic benefits from the import trade.

"As much as we might like to reduce our dependence on imported goods, it’s worth emphasizing that moving imported goods to markets throughout the nation represents a vital source of jobs – many of them well-paying – in a state where unemployment rates remain perilously high," O'Connell said.