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Foreign sales by U.S. companies dropped in 2009: S&P.

Companies in the S&P 500 index saw sales to foreign countries drop in 2009, after three consecutive years of rising overseas revenues.

Data from Standard & Poor's reveal that 46.6 percent of total sales generated by companies in the index came from outside the U.S., down from a figure of 47.9 percent in 2008.

Or looked at another way, in 2009, S&P 500 foreign sales decreased by 16.0 percent, while domestic sales decreased 11.2 percent.

"Total reported 2009 fiscal sales for the S&P 500, on an aggregate basis, decreased 12.0 percent from $9.08 trillion to $7.99 trillion, matching the 2005 level of $7.94 trillion," said Howard Silverblatt, S&P senior index analyst.

"The sudden and massive decline was the product of the global recession and the massive pull-back in consumer spending in the U.S."

Also, according to S&P, European sales from S&P 500 companies declined to 25.6 percent of foreign sales in 2009 from 27.7 percent in 2008, while Asia increased to 17.6 percent from 13.2 percent.

Canada was the primary foreign individual recipient of S&P 500 foreign sales in 2009 at 7.4 percent (down from 9.3 percent in the prior year).

By sector, Information Technology continued to dominate, with more than 56 percent of its declared sales coming from outside of the U.S.

On the whole, the IT sector represents 20.4 percent of all U.S. foreign sales.

S&P also found that total income taxes paid declined 24 percent in 2009 as U.S. issues sent $43 billion less to non-US governments than they did in 2008.

Federal income taxes paid to the U.S. government fell 13.6 percent to $92.7 billion in 2009 from $107.2 billion in 2008. Additionally, income taxes paid to non-U. S. governments declined 32.0 percent to $91.7 billion from $135.1 billion in 2008.

"While actual country payments are not reported, the aggregate loss of $43.3 billion of income to non-US sovereigns puts additional budgetary pressures on an already strained system," noted Silverblatt. "Taxes paid to the U.S. now constitute a majority at 50.2 percent of all income taxes paid by U.S. companies, up from 44.2 percent in 2008."

Other data also pointed to the diminishing role of the U.S. in global economic affairs.

Seven years ago, U.S. equities made up 57.6 percent of the world equity market (as defined by the S&P Global Broad Market Index). Today, U.S. equities make up 42.8 percent.

Six years ago, the U.S. Gross World Product (GWP) comprised 29.6 percent of the world GWP. Today, it is 16.8 percent, with China accounting for 10.4 percent, and the consolidated European Union for 17.1 percent1.

"While the U.S. equity market and consumer remain the largest and most dominant component of their respective groups, the U.S. is no longer the single overpowering element," S&P said.<br /> "Where the U.S. used to catch a cold and the rest of the world got pneumonia, now the rest of the world gets the flu."

S&P&nbsp;further noted that the recent rise, fall, and current stabilization of the Euro with respect to the U.S. dollar attest both to the continued U.S. dominance, as well as its diminished status and percentage of world markets.

S&P&nbsp;concludes that while the current recession and market turmoil has had a significant impact on local markets, the overall trend has not significantly changed. Growth outside of the U.S. has, and is, expected to be greater than that of the growth within the U.S.

"The continuing shifts of labor, capital, and resources are expected to continue outside of the U.S., even though the U.S. is viewed with much higher political and economic stability," S&P added.
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Publication:International Business Times - US ed.
Date:Aug 5, 2010
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