The great trade collapse and rebound: a state-by-state view

During the Great Trade Collapse in the United States, which began in late 2008, one concern was that such a large collapse would transform exporting firms into strictly domestic firms or, worse, drive them out of business. In either case, it was feared that U.S. exporting might, at best, revive slowly. However, this fear about long-lived export impacts did not materialize. Clearly there were large export effects, but the sharp decline was quickly followed by a sharp rebound that began in mid-2009. In contrast to previous research, this study examines this historic episode from the perspective of individual states. A comparison of intensive and extensive trade margins reveals that the adjustment occurred to a greater extent on the intensive than on the extensive trade margin. In other words, the adjustment process entailed relatively larger changes in average exports per firm than in the number of exporting firms. It is likely much easier to alter existing export levels than to, first, eliminate all exports by a firm and, second, either restart exports by this firm or become a new entrant into exporting. The bottom line is that the U.S. export sector weathered the challenges associated with the global recession and financial crisis quite well. The fact that relatively large firms dominate U.S. exports likely contributes to the resiliency of the U.S. export sector.