Biting the Hand that Helps

   The U.S. economy slid worse than expected in the first three months of this year, by 2.9 percent, compared to a 1 percent drop in an earlier estimate, the Commerce Department said today.
   As noted here earlier this month, the U.S. economy began to slide last fall. The first quarter drop of 2.9 percent is a sharp turnaround from the fourth quarter increase of 2.6 percent. The July-September period saw a prosperous jump of 4.1 percent.
   So a change in the growth rate from positive 4.1 percent to positive 2.6 percent to negative 2.9 percent in less than a year is a clear downward trend. And if the second quarter, which ends June 30, also posts a negative rate, that fits the definition of recession: Two consecutive quarters of decline. We'll know July 30, when the first estimates come out.

   Meanwhile, the Party of No is continuing its rant to shut down the Export-Import Bank, a government-sponsored facility that helps American firms do business overseas. Notwithstanding the fact that the Ex-Im Bank actually posts a profit and contributes $1 billion to the U.S. Treasury yearly, the ranters insist that the lending facility is a waste of taxpayer money.
   One of the reasons for the economy's poor performance in the first quarter was a decline in exports, according to the Commerce Department, even as imports increased. There was also less inventory investment, as well as declines in state and local government spending.
   Separately, the chief of the Ex-Im Bank today struck back at the naysayers in the agency's annual report to Congress.
   "There is no stronger brand in the world than ‘Made in America,’ but the increasingly aggressive approach by some foreign competitors in the export financing marketplace presents an ever-growing threat to U.S. jobs,” said Export-Import Bank Chairman and President Fred P. Hochberg. “Our job at the Export-Import Bank is to back American workers and ensure that U.S. exporters, especially small businesses, remain competitive and have the support they need to export their products and create jobs here at home.”
   Last year, the bank approved more then $27 billion in guarantees, export-credit insurance, and financing to help foreign buyers buy U.S. goods and services. In doing so, the Ex-Im Bank earned more than $1 billion above the cost of operation, the report to Congress said. These moves supported $37.4 billion in export sales and 205,000 American jobs. And nearly 90 percent of these projects were for small businesses, the Ex-Im Bank said.

   The downturn in GDP (Gross Domestic Product, the total value of all goods and services produced in the U.S.), "primarily reflected a downturn in exports," in addition to the other declines, the Commerce Department said.
   So if the economy is declining because American firms can't sell stuff overseas, the answer is to stifle their ability to get financing to help sell their stuff overseas, according to ranter reasoning.

   Never mind fact or reality, that without Ex-Im Bank financing American firms lose a competitive edge. If government does it, it must be bad, goes the mindless reasoning. Perhaps corporate leaders and the Chamber of Commerce, as well as some few politicians who understand arithmetic, can override the Tea Party verbosity and get Congress to reauthorize the Ex-Im Bank. Oddly, even the ranters most strident in opposing the bank have voted to keep it alive in the past.