Do Chinese imports necessarily qualify as "foreign imports" in the traditional sense? I could see how a falling dollar would affect the imports of EU products, but not those manufactured in cheap labor markets. In a sense, wouldn't a weak dollar serve to strengthen and even diversify our imports from these markets?

Dean, what about the fact that we don't really have a industrial base in this country anymore? How can exports suddenly explode when we don't have factories operational anymore? I can't find a single thing made in the US anymore. As the dollar plunges, the adjustment period before an export led recovery doesn't seem too fun to me. Beyond that, because the trade deficit will natural force the dollar lower, then why is it necessary for
Bernanke to try to debase the dollar. Can't he just let it happen on its own?

The post just doesn't want to see the health bill pass, facts be damned.

They won't acknowledge its a bill that won't increase teh deficit, and they are using the deficit to scare people from supporting it.

This is standard fare from the post. What would be surprising is if they worried about the next great defense boondoggle, due to concerns about the deficit. That WOULD BE shocking.

What I also find annoying is how few papers explain how government revenues have fallen becuase of the recessiion (and give some sense of the proportions for causes, please). That's basic common sense, but instead they just blame the incumbents for it.

If it rains tomorrow, is that Obama's fault? It is if your Fred Hiatt -- or at least it's a tool to attack him with.

Free marketeers would probably expect the post to be a liberal paper (it's audience is 90% against R's). But, those simple minded folks ignore complexity, which is needed to explain the post's role.

Ben,
It is not true that we don't have a manufacturing base in this country. US is still the largest manufacturer in the world and is responsible for 22% of the worlds manufacturing output, although China is catching up fast. We surely have fewer people working in manufacturing due to very high productivity. Take agriculture for example only 0.9% of our working population works in agriculture but the US is the largest exporter of agricultural products in the world.
You can make a case that the manufacturing base is eroding but it is far from reality that we don't have a manufacturing base right now.
The stuff we manufacture is just not very visible in consumer products.

US will mainly gain at the expense of Europe and Japan with the falling dollar.

I thought Japlift an was the largest manufacturer.

Sorry about the mistake - obviously it's supposed to read Japan.

Here is one link with 2007 data.
http://investing.curiouscatblog.net/2008/09/23/top-manufacturing-countries-in-2007/

Japan used to represent a very high percentage relative to its population size in the 90s. But as you see in the data, it is the country which has suffered the most in terms of manufacturing output growth.

roger: interesting data. Any idea how much of US manufacturing is related to the military?

Were the US dollar to plunge suddenly by another 40% against the currencies of "Europe, Japan and other countries", the holders of US dollar-denominated assets would be the first to be hurt, even before exporters to the US. The entire stock of US dollar-denominated assets would take enormous losses before exporters to the US started to see the flow of orders into their US order books drying up. Central banks are holders of large amounts of US dollar-denominated assets, so one would expect them to resist such a plunge. But are they really up to the task ? If everyone wants out of the US dollar at the same time, there is surely going to be a stampede at the gates. So, it makes sense to run a sensible economic policy to lessen the risk of such a stampede. Clearly nobody wants such a nightmare scenario to turn real. But fear, as we have had occasion to remind ourselves in recent years, cannot be reasoned away. Nor, however, must one, like the Post, play on fear by deficient and defective reasoning.

Foreign central banks and exporters don't want the dollar to plunge but desires are not what matters. Nobody wanted the housing bubble to go bust but it did anyway.

piglet: I don't know but I would guess it is in the $100B range because that was the defense procurement budget for last year.

Looks like trade deficit is named in the third graph:

"The moves have sharply improved the U.S. trade deficit, as everything from American-made cellular phones to furniture suddenly become more competitive both at home and overseas while giving foreign manufacturers more incentives to create jobs in the United States. Analysts say the severity of the downturn in the United States as well as the unemployment rate would be markedly worse without the weak dollar.

In fact, it says at the end that the weak dollar is a problem the U.S. "loves to have" while also quoting foreigners who say the U.S. is deliberately weakening its currency to make its export industry stronger.

This article seems to me to confirm what Baker is saying in his post here- what am I missing?

The data roger points to say that the US (as of 2007) is by far the biggest manufacturer yet most Americans would be hard pressed to name anything they recently bought that was made in the US, and at the same time common wisdom tells us that the manufacturing sector keeps hemorrhaging jobs and leaves whole regions devastated. I am wondering, is it really the perception that is wrong or is something wrong with the data? One question that is raised by the data is how they account for imported components in US assembled products. Are these included in the output figure?

Finally, here are data for 2008 that are slightly different:
http://investing.curiouscatblog.net/2009/10/13/data-on-the-largest-manufacturing-countries-in-2008/

Unfortunately I cannot find the original source.

It looks like the Euro will be moving lower against the US dollar over the next months and that should help.

It all has to do with interest rate differentials and relative economic growth.

There is a way to profit through from the ups and downs of the stock markets: use timing signals to figure out when to get in and when to get out.

Consider http://invetrics.com

Its daily DJIA index trading signal is up a respectable 65% for the year (as of October 29, 2009) and it is free of charge for individual investors.

I have another question that somebody hopefully can help me with: is construction counted as manufacturing? If not, where is it counted? It can,t be services can it?

I found economic census data here:
http://www.census.gov/econ/census02/data/comparative/USCS.HTM

Unfortunately, these data are totally unrelated to the data referenced above. The manufacturing output 2002 is here given as 4 trillion. Hard to make sense of these conflicting information.

Finally! I found where the international data are taken from: http://unstats.un.org/unsd/snaama/dnllist.asp, table "All countries for all years". These data are NOT adjusted for inflation. They are, within limits, useful for international comparison although PPP calculations have notorious problems. But they should not be used to study trends in time unless adjusted.

A few data points:
1970 1980 1990 2000 2008
24.2 21.1 18.1 15.8 13.0 %share of mfg
1094 1304 1537 1876 1830 billions of 2008 dollars

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