His editors asked Jeremy W. Peters to write an article about the positive effects of the dollar decline.

So Peters sits down and explains that the lower dollar already increases exports. It thereby diminishes the trade deficit, creates more jobs and lets the economy grow.

Expert quotes that support the thesis are selected and dutifully some facts are included.

The result is a ridiculous New York Times frontpage puff piece headlined Rising Exports Putting Dent in Trade Gap.

Let’s take it apart:

[A]s companies in the United States are gaining ground overseas, they are also sending more American-made products abroad. A weaker dollar is adding to their good fortunes, helping to make American goods and services more competitive in foreign markets.

As a result, it now looks as if the huge trade deficit, which swelled to a record $765.3 billion last year, could gradually decrease.

The headline says that exports really do "dent" the trade deficit. Now that is qualified down to "could." And in the fact world:

The trade gap widened in March, mostly because of higher prices for imported oil, but the vast disparity between what Americans import and export is expected to narrow, which would allow trade to contribute to economic growth in the United States for the first time in more than a decade.

Ooops – yes, increasing exports could dent the trade gap, if only exports would rise and imports would not rise at a greater pace. Both is not the case. The Bureau of Economic
analysis in its first quarter GDP report says:

The deceleration in real GDP growth in the first quarter primarily reflected a downturn in exports,
an upturn in imports, …

But there are expectations that something could happen – really. Peters goes on:

The shift to a more export-driven economy, if it continues, could add more jobs at home and help the United States bounce back from its slowest economic expansion in four years.

As we have seen there is no such shift yet. There is also the little issue that a U.S. company while increasing its foreign revenue, often a nominal export, might not necessarily create more jobs – at least not in the U.S. In a side note Peters even tells us so:

For Citigroup,
which is planning to eliminate 17,000 jobs and relocate 9,500 more,
India has been the biggest driver of growth for its international
operations.

Exports make only a fairly constant 10-12% of U.S. GDP. Even if exports would grow by 10%, the resulting GDP increase would be much too small to have any decisive effect on the job market.

But the author has asked his experts and they all agree. Only the facts are slightly off.

But there is no disagreement that whatever the cause, the flow of orders from overseas to American producers is finally starting to decrease the trade deficit. As a result, net exports could add to growth in the United States this year rather than subtract from it. That has not happened since 1995.

Trade contributed to growth in the second and fourth quarters last year. In the government’s preliminary estimate for the first quarter of this year, trade was a slight drag on the economy.

Most economists, however, expect trade to improve for the rest of 2007. And when the level of trade is averaged out over the last four quarters, it faintly added to overall economic activity.

While the headline, the quoted people and the general tone of the article do suggest more exports, a lower trade deficit,  the creation of jobs and economic growth, not one of the hard numbers really supports the story. What is left are expectations that these numbers might somehow change.

In theory a lower dollar should increase exports. But a lower dollar also increases import prices. The effects, at least in the short term, may very well be a bigger trade deficit, higher inflation and an overall negative outcome for the U.S. economy.

There has been a small "dent" in the February trade numbers, but that was a result of importing less oil and a hefty draw down of oil inventory instead.

The U.S. constantly consumes more than it produces. A few more Caterpillar shovels sold to the world will not change the effect of bad gas mileage of millions of SUVs.

But why recognize the inevitable necessity of lower consumption, when one can read about and believe in such wonderful expectations.