Plus: China Poised to Overtake U.S. as Top Trading Nation, States Boost Export Rates, Gauging the Stimulus’s Effects and MORE.

Manufacturers Call to Renew Export-Import Bank

Business groups last week pressed with increasing urgency for the United States Congress to raise the lending cap on the self-funding Export-Import Bank, which guarantees loans from U.S. banks to foreign companies to buy U.S.-made products

On May 31, the bank will be unable to extend new credit guarantees or direct loans until some of its existing loan commitments are repaid.

“It faces a current lending ceiling of $100 billion and is expected to meet that level in the next several months — possibly before its current reauthorization runs out at the end of May,” the Wall Street Journal explains (subscription required).

Manufacturers last week warned that Congress must act in coming weeks to raise the bank’s credit exposure cap, which is expected to reach its ceiling by late March. A bill currently stalled in Congress would raise the exposure cap to about $135 billion.

“If we are going to double exports and create jobs, manufacturers need Washington to level the playing field — starting with reauthorizing the Export-Import Bank immediately,” National Association of Manufacturers (NAM) President and CEO Jay Timmons said in a statement. “Congress needs to start now by reauthorizing the Export-Import Bank quickly and expanding its nearly-exhausted lending ceiling.

“Last year alone, the bank supported 290,000 American jobs that we can’t afford to lose – and at no cost to the taxpayer. Since 2005, the bank has returned more than $3 billion to the U.S. Treasury,” Timmons continued. “If the bank is not reauthorized and the lending cap increased, the competitiveness of thousands of small and medium-sized businesses will be adversely impacted and we will lose out to our competitors, hurting job growth and our economy.”

The fiscally conservative Club for Growth has been leading the charge against the Export-Import Bank, calling it “corporate welfare” and warning that lawmakers who support reauthorization will be noted on its scorecard. Yet 14 key business groups, including the U.S. Chamber of Commerce, recently sent a letter to Congress urging them to support the reauthorization, saying failure to do so would “seriously disadvantage U.S. companies — small and large — in foreign markets, potentially resulting in the loss of thousands of U.S. jobs.”

President Barack Obama has called on Congress to reauthorize the bank with a higher lending limit, emphasizing the need to compete with China and other countries on export financing.

Top Exporting States in the U.S.

Exports of U.S. goods posted strong growth in 2011 on both national and regional levels, with 36 states reporting double-digit increases in merchandise exports, according to the International Trade Administration last week. Of those, 23 states exceeded the national growth average for exports.

Overall U.S. merchandise exports increased by $202 billion in 2011, climbing to a record $1.48 trillion total. Part of the gain was driven by a large increase in demand for goods produced in Texas, which saw merchandise exports rise by $43 billion last year.

“America has a strong competitive edge in the global marketplace,” Under Secretary of International Trade Francisco Sánchez said in an announcement of the results. “Consumers worldwide have a strong affinity for U.S. goods and services, and appreciate American-brand name values and U.S. companies’ reputation for quality, performance and after-the-sale service. The most recent figures show that U.S. exports are fueling our economic recovery.”

Texas alone accounted for 21 percent of the growth in merchandise exports from 2010 to 2011, with total shipments worth $249.9 billion. The other top exporting states were: California ($159.3 billion), New York ($82.8 billion), Florida ($64.7 billion), Washington ($64.6 billion), Illinois ($64.5 billion), Louisiana ($55.1 billion), Michigan ($50.8 billion), Ohio ($46.4 billion) and Pennsylvania ($41 billion).

Exports have provided a major boost to the U.S. economy and have been one of the leading factors in the country’s ongoing economic recovery, with merchandise exports in particular providing a significant share of the $2.1 trillion goods and services exports total in 2011. U.S. merchandise exports increased 16 percent over 2010, putting the country on track to meet the president’s goal of doubling U.S. exports by 2014.

China Poised to Overtake U.S. as Top Trading Nation

The global economy is entering a new period of international trade growth, with world trade set to increase 86 percent in the next 15 years, according to HSBC’s Global Connections trade forecast. The bank says total world trade activity will climb to $53.8 trillion by 2026.

“Despite the current climate the overall trend for international trade is positive with growth acceleration sooner than expected from 2014, rather than 2015. After 2014 the global economy ends a period of slow growth and contraction and sees an upturn in trade in line with GDP forecasts,” the HSBC report states. “Over the next five years it is forecast that world trade will grow at an annualized rate of 3.78 percent…due primarily to the expectation of an earlier recovery of the overall global economy. In the period 2017-2021, the forecast predicts even more rapid annualized growth at 6.23 percent, as world demand for traded goods recovers its dynamism.”

Trade in North America is expected to expand 72 percent by 2026, with the fastest-growing sectors in the next five years being printing machinery, vaccines and blood products, Bloomberg News notes.

According to HSBC, trade in China and the Asia-Pacific region will grow at an annualized pace almost twice as fast as the world average over the next five years, driven by shipments within the region and expanded ties with Latin America, the Middle East and North Africa.

In fact, China is expected to overtake the U.S. as the world’s largest trading nation by 2016, as intra-Asian commerce and rising demand from emerging markets boost shipments. HSBC estimates the value of China’s trade will rise at an annualized rate of 6.6 percent over the next five years, compared with 6.5 percent gains for Asia and 3.8 percent for the world.

“In 2012, the top trading nation will remain the U.S.A. It alone accounts for some $2.64 trillion in trade value, although China is rapidly closing the gap,” HSBC says. “By 2016, China will have overtaken the U.S.A. as the largest trading nation. Indeed, the top 10 largest trading nations are all forecast to grow over the next five years, except the U.K., which is forecast to slow slightly by -0.40 percent.”

The Stimulus’s Economic Impact

Three years after the passage of the American Recovery and Reinvestment Act of 2009 (ARRA), the effects of the economic stimulus are still being felt, providing a picture of slow but sustained economic gains despite shortcomings in some areas.

In a recent analysis, the Congressional Budget Office (CBO) found that in the fourth quarter of 2011 alone, ARRA’s policies increased real, inflation-adjusted gross domestic product (GDP) between 0.2 percent and 1.5 percent. Meanwhile, the unemployment rate was lowered by between 0.2 percentage points and 1.1 percentage points, and between 0.3 million and 2 million new employees were hired.  The report estimates that the stimulus also created 0.4 million to 2.6 million new full-time jobs in Q4 2011.

After peaking in the first half of 2010, the effects of ARRA waned through most of 2011. The CBO forecasts that ARRA will increase budget deficits by about $831 billion over the 2009-2019 period, with close to half of that deficit incurred in fiscal year 2010. The economic stimulus is still projected to increased GDP between 0.1 percent and 0.8 percent in 2012, and increase the number of full-time jobs by 0.2 million to 1.3 million.

In a related report, the Council of Economic Advisers estimated that between the legislation’s introduction in 2009 and mid-2011, the stimulus raised GDP between 2 and 2.9 percent above what it would have otherwise been. In addition, without the stimulus there would have been between 2.2 million and 4.2 million fewer Americans employed.

“These are simple pictures that suggest a simple point: The economic turnaround coincided with the passing of the stimulus,” The Atlantic notes. “The month before the stimulus was passed was the worst month for private sector layoffs in 60 years. Six months later, the recession was declared to be technically over, even though unemployment continued to rise.”

Jobless Claims Hold at 4-Year Low

New initial jobless claims remained relatively unchanged in the latest week reports. According to the U.S. Department of Labor, seasonally adjusted unemployment claims for the week ending February 18 totaled 351,000, the same as the previous week’s total and the lowest level since March 2008. However, the four-week moving average, which provides a clearer long-term picture, fell by 7,000 down to 359,000.

“Hiring is generally viewed as on the rise when applications for jobless benefits drop below 400,000. New applications for jobless benefits have fallen under that mark in all but two weeks over the last four months,” MarketWatch explains. However, “the U.S. economy still isn’t adding jobs at a pace fast enough to repair most of the damage caused by the 2007-2009 recession.”

The national unemployment rate has steadily fallen from its 2011 peak of 9.1 percent, but remains at an elevated 8.3 percent. Including part-time workers unable to find a full-time job and those have given up looking for work, unemployment goes up to nearly 15 percent. At current hiring rates, unemployment would not return to pre-recession levels for several years.

Congress recently voted “to maintain expanded unemployment benefits through Dec. 31,”  Bloomberg News reports. “The $30 billion extension gradually reduces the number of weeks recipients can receive benefits, down from the current 99 weeks, according to separate summaries provided by Democrats and Republicans on the House Ways and Means Committee.”