Regular readers of Beat the Press know that putting numbers in context is one of my main beefs with economic reporting. News stories, especially about government budget items, routinely throw out big numbers that are completely meaningless to almost everyone who reads or hears them. That is not serious reporting. Reporting is about informing your audience. (This is why I use the term “frat boy reporting” to refer to the use of big numbers without context. It conforms to a ritual among reporters, but it does not provide information.)
To his great credit, Glenn Kessler, who runs the Washington Post’s Fact Checker section, does believe in putting numbers in context. He did so in a piece today that examined the claims that sanctions against Iran had cost the United States $175 billion in exports. (The original study is here.) Kessler pointed out that this number sums estimates of lost exports over 18 years, and therefore it is deceptively large. He points out that this sum amounts to just 0.5 percent of U.S. exports over this period.
This analysis is very helpful in giving readers a better sense of how much these lost exports mean to the economy. It is also possible to compare the lost exports to another item that has been in the news lately, the Export-Import Bank whose current authorization ends on September 30th. According to the Bank, its loans supported $37.4 billion in exports in 2013. By comparison, the study on the impact of the sanctions calculated that the United States would have exported $15.4 billion worth of goods and services to Iran in the absence of sanctions in 2012 (the last year covered), an amount that is equal to 41.2 percent of the exports supported by the Export-Import Bank.
This comparison should give readers an indication of the relative importance of the sanctions and Ex-Im Bank. Of course, the volume of exports supported by the Ex-Im Bank exaggerates its actual importance since many of these exports would take place even without the Bank’s support. For example, if the Bank supports $15 billion in exports from Boeing, then perhaps $10-$12 billion of these exports would still occur even without the Bank’s support. Boeing would simply earn a smaller profit on these exports since it would have to pay the market interest rate on its borrowing.
If we say that between 10 percent and 30 percent of the exports supported by the Bank would not occur without access to its loans or guarantees then it added between $3.7 billion and $11.1 billion to U.S. exports in 2013. This is between 24.0 percent and 72.0 percent of the amount of exports lost in the prior year due to the the sanctions against Iran, according to the study.