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Show 10F Sunday March 20, 1983 The Salt Lake Tribune Sagging Export Sector a Good Reason to Expect No Boom By Robert Stickler Writer Chicago If you are looking for one good reason why the U.S. economy wont boom this year, you need not look ports will be a sizable drag on gross national product all year. Sun-Tim- The U.S. trade deficit, which hit $40 billion in 1982, may double this year, some analysis predict. Exports of capital equipment have been especially hard hit, said George Cloos, a business economist at the Federal Reserve Bank of Chicago. And there are no signs it is going to improve. Years ago, economists would have hardly looked at the export sector. In 1970, only about 9 percent of American goods and services was produced for export. As domestic markets matured, American producers, at the urging of the government, began to take advantage of growing foreign markets, enhancing U.S. growth and employment. By 1980, exports had a 19 percent share of the American economy and were rising. Critical to Employment U.S. Treasury Secretary Donald Regan told a congressional commit past exports. Economists say that the sagging U.S. export sector was a big factor in preventing economic growth during the last half of 1982. And while the rest of the economy is strong enough to overcome weak exports, the inability of U.S. firms to expand their sales overseas is expected to continue to provide a drag that will prevent the recovery from gathering much speed in 1983. The combination of high interest rates and worldwide economic weakness led to a very strong dollar and a massive decline in exports during 1982, said Walter W. Heller, an economics professor at the University of Minnesota who headed President Kennedys Council of Economic Advisers. During 1983, this trend will continue, particularly in the first half. The decline in net ex tee last month that vigorous expansion of our export sectors has become critical to employment in the United States. (Exports) accounted directly for 5 million jobs in 1982, including one out of every eight jobs in manufacturing industry. And, a Treasury survey recently found that four out of every five new jobs in U.S. manufacturing were coming from foreign trade. It estimated that every $1 billion increase in U.S. exports results in 24,000 new jobs. Unfortunately, U.S. exports have been contracting since 1980 in real dollars. And the outlook for 1983 is for more of the same. Foreign economies today remain in recession. Lesser developed countries, which have accounted for much of the growth in U.S. exports in recent years, are limiting their . imports to cohserve funds to pay back their massive debts. For example, Mexican debt problems have caused a $10 billion annual-rat- e drop in our exports to Mexico be tween the end of 1981 and the end of 1982, Regan said. Stubbornly Strong Dollar The lack of worldwide demand for U.S. goods is exacerbated by a stubbornly strong dollar that makes U.S. goods more expensive overseas. Economists warn that exports could be worse if trade skirmishes between this and other countries escalate. To glean the effect of this problem, you need only visit Caterpillar Tractor Co. in Peoria, 111. The worlds largest manufacturer of g equipment found the combination of a sagging U.S. and world economy plus a strong U.S. . dollar unmovable in 1982. In testimony last November be- -. fore a congressional subcommittee, Chairman Lee J. Morgan related one example of how the strong dollar has hurt Caterpillar. The tractor company was bidding for a contract in the Middle East. Its dealer was willing to make the sale for $14 million, which was about a earth-movin- Chicago Northern Trust Co. economist William Wilby. Without the deterioration in net exports, real GNP growth would have been 2.5 percent instead of the zero percent recorded. Meanwhile, imports into the United States are expected to soar. That means that a healthy portion of the increased consumer spending expected this year will go toward the purchase of foreign goods. Instead of exporting goods and services, the U.S. will be exporting part of its economic recovery. Economists say that the export slump should end sometime in 1984 and perhaps help to extend the U.S. economic recovery. The increase in U.S. imports will help stimulate a recovery overseas, which in turn will provide a market for U.S. exports, said Northern price. Komatsu, Cater- break-eve- n pillars prime competitor overseas, won with a bid of $11.3 million. Catif erpillar economists figured that the Japanese yen had been selling at 180 to the dollar rather than 260, Komatsus bid would have been $16 million. Major Sore Spot The dollars exchange rate against the yen is one of the major sore spots with U.S. businessmen. Caterpillars exports, which account for more than half of the companys sales, plunged by $1.5 billion in 1982 and were a big factor in the company writing its bottom line in red ink. More than 25,000 Caterpillar employees, about 30 percent of tbn companys work force, lost their jobs at least temporarily. As the statistics for last years third-quartshow, Caterpillar wasnt alone. Deterioration in the net exports component of real GNP was a key factor in the weak growth demonstrated in the third quarter, said Trusts Wilby. This in ing about worldwide important recovery. turn will assist in bringa generalized pickup in an economic activity ingredient in any U.S. Do Your Technical Manuals Gather Duat on Your 1 Customers Shelves? 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