As concerns over the economy grow, the Bush administration has pointed to surging export numbers as a bright spot for the US. But one Connecticut expert believes such optimism may be misplaced.
The dollar has continued its fall in recent months, reaching a record low against the euro, and a 12 year low against the yen. Thatâ€™s been great news for companies selling abroad, with exports up more than 16 percent in January, according to the Commerce Department. Connecticut has seen a good share of this cash, with exports from the state up 12 percent in 2007. But Robert Engle, professor of international business at Quinnipiac University says the reasons behind the falling dollar are far from good for the US economy.
â€œThings like our budget deficit, our inflation rates, our interest rates, the war, and the money weâ€™re spending on the war, the mortgage defaults, our savings rate, our credit card debt, rising unemployment, our dependency on foreign energy - all of these things have an impact as to whether or not people want to buy the dollar or sell the dollar.â€
Engle says if exports are truly to be seen as a positive for the US economy, they shouldnâ€™t be entirely dependent on the position of the currency.
â€œIf weâ€™re going to be exporting, Iâ€™d rather see us exporting on the basis of strength. On the basis of innovation, good products that people want and are willing to pay for. That is a much more sustainable reason to be exporting.â€
Engle says the current positive effect on the countryâ€™s trade deficit is real, but he says the administration is overstating the potential benefits to the economy in the face of worse news on other fronts.