The 1.9 percent rise in second-quarter GDP was largely the result of exports of U.S. manufactured goods, boosted by the weak dollar, which is not only good news for U.S. industry and its metal suppliers but for the country at large.

“The real story is that the 9.2 percent rise in exports more than offset the downturn in housing,” said David Heuther, chief economist for the National Association of Manufacturers.

In fact, exports alone accounted for 61 percent of economic growth in the second quarter. Over the past year, fully two-thirds of GDP growth has come from U.S. exports, 63 percent of which are manufactured products.

“While the trade balance as a share of GDP edged up to 5.2 percent, this was entirely due to the rising price of imported oil,” Heuther said. “Petroleum imports now account for 66 percent of the entire U.S. trade deficit. Excluding petroleum imports, the U.S. trade deficit narrowed to just 1.7 percent of GDP in the second quarter, the lowest level in nearly a decade.”

Consumer spending accelerated by a modest 1.5 percent in the second quarter, fueled by government stimulus checks, but residential investment continued to decline at a double-digit rate. “This was a milder decline (15.6 percent) than during the prior three quarters, suggesting that the worst of the housing recession may be behind us,” Heuther said. 

“Rising exports are the brightest light for our economy right now,” he continued, “and our biggest foreign markets are those countries with which we have free trade agreements.” They include Australia, Bahrain, the Dominican Republic/Central America, Chile, Israel, Jordan, Morocco, NAFTA, Oman, Peru and Singapore.

In fact, so far this year the U.S. actually has a surplus in trade of manufactured goods with those countries. That’s important to labor groups here who lobby against free trade agreements and generally oppose the import of any product that could have been made by an American worker.

Testifying before the House Committee on Small Business in June, Charles Wetherington, president of BTE Technologies Inc. of Hanover, Md., argued that with a little more help from Washington, small manufacturers could provide a dramatic boost to U.S. exports, help reduce the trade deficit and foster job creation. Speaking on behalf of NAM, he noted that the U.S. exported $982 billion in manufactured goods in 2007, 60 percent of all U.S. exports of goods and services. But manufacturers, especially small manufacturers, can contribute much more to reducing the trade deficit, he said. The vast majority of small companies do not export because they lack the expertise and resources to access foreign markets.

“Given the likelihood of continued large imports of oil and foreign manufactured goods, we need a huge ramp-up of our exports, most of which will have to be manufactured goods. We need a national export expansion strategy designed to achieve a large and sustained increase in our exports.”

Clearly, trade policy is only a small part of the huge task facing government officials as they strive to correct our fiscal course. While the U.S. economy can’t tread water by clinging to exports indefinitely, the simplest short-term step Congress can take to promote economic recovery is to move ahead with the pending free trade agreements with Colombia, Panama and South Korea.