Biggest hit as GDP falls: American exports
US output fell 3.8 percent at the end of 2008, but exports slid at a 20 percent rate.
If you wonder why the machinery maker Caterpillar is laying off more than 20,000 workers, the answer comes through loud and clear in the latest numbers on America's economy.Skip to next paragraph
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As the nation's production of goods and services fell at a 3.8 percent annual pace in the final quarter of 2008, one of the steepest parts of the slide was in exports.
The global economic downturn means that Caterpillar, which not many months ago was one of corporate America's big stories of industrial success, is selling a lot fewer excavators and pipe layers.
For years, US exports grew faster than other parts of the gross domestic product (GDP). But in the most recent quarter, exports fell much faster than the rest of the economy, declining at a 20 percent annual pace.
It's a sign of how a recession that began with trouble in American mortgages has gone global, and now that global impact is bouncing back at the US.
The IMF has revised its outlook for the world economy downward, with many nations facing even harder times than the United States. It now expects GDP to decline for the year by 1.6 percent in the US, 2 percent in the European Union, and 2.6 percent in Japan.
Disruptions in credit markets are hurting not just household spending but also the ability of companies to produce and ship goods, the IMF said in its new forecast.
Help for the middle class
President Obama focused on the economy's troubles on Friday, when the American GDP numbers came out, and in his radio address Saturday. First, he unveiled a task force to focus on strengthening the middle class and urged quick passage of his economic stimulus plan.
He also said the economy needs more than just more jobs, it needs better ones that offer average Americans "a way forward and a way up."
In his radio address, Mr. Obama said that a plan to fix credit markets is on the way – one that will lower mortgage costs and offer job-creating loans for small businesses. He also pledged tighter controls and oversight of how banks spend any rescue money they receive from taxpayers.
Obama also sought to prepare Americans for a slow recovery from the current slump. "No one bill, no matter how comprehensive, can cure what ails our economy," he said.
The challenge is magnified by the global scope of the downturn.
Not long ago, the world economy overall was enjoying its fastest growth in modern times. The expansion of trade has meant expanding productivity rates and jobs, allowing most nations to grow faster than they could without such ties.