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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

May 26, 2010 at 9:50 AM

Like the durables report? Thank Boeing

Just to show how vital Boeing has become to a deindustrialized America: Take out aircraft and other transportation from today’s “positive” durable goods report, and orders actually decreased 1 percent in April. A big driver was orders was a 228-percent increase in civilian aircraft attributed to Boeing, adding 3.9 percentage points to the overall durables performance.

Boeing, of course, is also a huge part of American export growth, which has been generally recovering in recent months, although it remains well below pre-recession highs. But what will the European crisis and slow recovery mean to trade, where Washington state is an outsize player? Nouriel Roubini’s shop notes that much growth has come not only from inventory restocking in the United States, but from developing economies’ appetite for goods and commodities. Inventory restocking should end by the middle of the year. Meanwhile, “trade and financial contagion from the eurozone and the loss of exchange rate competitiveness will likely affect U.S. exports. Similar effects and slower U.S. growth in (the second half of 2010 will also hit (emerging market) exports,” the report states.

An extra challenge for American exporters comes from the strengthening dollar, as instability of the euro sends investors into the dollar safe haven, making American goods more expensive.

The Back Story: Microsoft’s shakeup of its entertainment and devices divisions, including the departures of Robbie Bach and J Allard, has been ably covered by the Seattle Times’ Sharon Chan and Brier Dudley. Everybody in the Puget Sound region had better hope it works and that we’re not witnessing the software equivalent of General Motors, circa 1985.

Andrew Leonard of Salon adds some further context to the challenges Microsoft faces.

Allard’s focus: The Internet is an important way for us to make money. Apple and Google’s focus: How do we make the Internet work for you. Their philosophies are different — Apple believes in controlling the interface, while Google pursues a more open approach — but the fundamental understanding is shared. Cool tools to do cool things. Meanwhile, Microsoft just wants market share.

Microsoft, despite J Allard’s best efforts, never went native, never really figured out how be part of the culture, instead of a carpet-bagging interloper. Apple was always there, even before the Net, lost its way, and then found it again. Google was born there and never left.

Still, he concedes, Microsoft has surprised us before.

Today’s Econ Haiku:

State run-liquor stores

Sounds so Soviet-era

Or at least Southern

Comments | More in Aerospace/Boeing, Microsoft, Trade

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