A caveat on California

Although California exports continue to surge, the news is not all good, say economists. In the case of the latest figures, foreign buyers were banking on continued weakness in the U.S. dollar by snapping up a wide range of relatively inexpensive American products from soybeans to aircraft.

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Although California exports continue to surge, the news is not all good, say economists. In the case of the latest figures, foreign buyers were banking on continued weakness in the U.S. dollar by snapping up a wide range of relatively inexpensive American products from soybeans to aircraft. 

As we reported here earlier in the week, Beacon Economics’ analysts expect continued moderate growth in exports…but not without caveats.

Analysts noted that the growth in exports is partly a function of solid growth in foreign nations—particularly developing economies. The rapid pace of inflation in developing nations relative to the United States has been putting pressure on the real value of the dollar, which is now 15 percent cheaper than it was in 2005 relative to a basket of developing nation currencies.

Beacon also disputed the often-cited belief that exports might have been slowed in February by anticipation of the disruptive effects New Year’s holiday celebrations have on economic activity throughout much of Asia.

On the plus side for California exporters, the dollar has fallen 6 percent so far this year against a weighted basket of currencies from America’s major trading partners. Most forecasts call for the dollar to move even lower as the year through this year.

The earthquake and tsunami that devastated northeastern Japan and the subsequent nuclear disaster will roil trade for months but should be offset to some extent by a surge in shipments of relief supplies and reconstruction materials, Beacon noted.

And as our other bloggers have agreed, the biggest wild card right now (“arguably,” said Beacon) involves the price of fuel.

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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at pburnson@peerlessmedia.com.

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