from Follow the Money

America’s most successful export industry powers on …

July 25, 2005

Blog Post

More on:

United States

Budget, Debt, and Deficits


Ok, housing is not usually thought of as an export industry.  But it sure seems to be doing quite well.

And, as General Glut has pointed out, it is quite possible to securitize the payment stream on mortgage and to export it.  Since the US now exports more long-term debt than goods, shouldn't we start to revise our list of the parts of the US economy that are benefiting most from international trade?

US goods exports in 2004 were about $808 billion.  Gross US "exports" of long-term debt were more like $876 billion.

The port data from Los Angeles suggests that US "goods" exports to the East Asia did not pick up in June.  But I would guess that Chinese demand for US debt stayed strong.   Through May, China had bought $38.4 billion of US debt (short-term as well as long-term; long-term debt purchases were around $29 billion) and only $15.7 billion of US goods.   And China's actual purchases of US debt probably exceeded its recorded purchases -- as I never hesitate to point out, there is a big gap between China recorded reserve growth and its recorded purchases of US debt.

Sometimes I hear people ask why "exporters" to China are not a louder voice in the debate over US China policy. 

Part of the answer is that the US doesn't actually export many goods to China.  in 2004, the sclerotic eurozone economies exported far more goods to China than the dynamic, hyper-competitive US economy.  And US goods exports to China, along with US goods exports to the rest of Asia  -- are not growing all that fast, particularly this year. China is a big country, but it is not (at least not yet) a big market for US goods.  Boeing aircraft are a bit of an exception, but I suspect that China's (still state-owned) carriers may be shifting away from an almost all Boeing fleet even as India is emerging as a huge market for Boeing.  Politics? 

But the bigger part of the answer is that the sectors in the US that are benefiting from exporting to China -- see the Big Picture's nice wrap on housing -- don't realize how much of their current prosperity is "made in Beijing."  

How many real estate brokers used their year-end bonuses to lobby Washington to press China to hold on to its peg, and to keep on buying up so much US debt? 

And what would happen if some shock takes the "localized froth" out of the real estate market?   Are today's real estate brokers -- along with the construction workers now building homes -- the future US manufacturing labor force, as Professor DeLong posits?