[LINK] "Two Reasons the U.S. and Mexico Rise Together"

[rfmcdonald]

Matthew A. Winkler at Bloomberg View describes how Mexican-American trade is not a zero-sum affair. We will see if the underlying economic rationale for a close American-Mexican relationship can manage to survive Trump.

A Trumpist might deplore the success of these Mexican companies in profiting from rising U.S. prosperity. But then he'd have to consider American firms like Kansas City Southern, the Missouri-based railroad freight company whose almost-50 percent Mexico-sourced revenue is the largest such percentage in the Standard & Poor's 500 Index. It rallied 20 percent this year, or more than triple the S&P 500's gain. About 48 percent of the industrial shipping firm's sales came from Mexico last year, up from 44 percent in 2011 and demonstrating Nafta's free-trade benefits as Kansas City Southern increased its workforce by more than 9 percent during the five-year period, according to data compiled by Bloomberg.

Many market watchers have focused in recent months on the correlation between the peso and Trump's ups and downs in the polls as a bellwether of the November election. That's because Mexico has been a focus of Trump's bigotry and xenophobia as he has sought to assign blame for lost American jobs.

In truth, there are many causes for lost manufacturing jobs. Advances in technology and China's rise as the No. 2 economy are among them. Nafta was neither the killer nor creator of employment that its enthusiasts and detractors predicted. It did make the U.S. economy more efficient and therefore stronger. That's what global investors like about it.

The appreciation of Penoles, Kansas City Southern and Cemex this year provides a benign perspective of Mexico's relationship to the strengthening U.S. job market, where unemployment has fallen below 5 percent from a high of 10 percent in October, 2009. Housing starts have more than doubled, to an annual pace of 1.05 million since April 2009 after the worst recession since the Great Depression, according to Bloomberg data. Construction spending increased 51 percent to $1.142 trillion in August from the same month in 2011 when they'd fallen to the lowest level since 1999, while the number of workers in U.S. construction climbed 23 percent to 6.7 million, according to the Bureau of Labor Statistics.

Trump excoriates American auto makers for using Nafta to create jobs in Mexico instead of the U.S. He recently attacked Ford Motor Co. for moving production of Focus compact cars from Wayne, Michigan. But the Wayne factory will continue to operate with no loss of its 3,700 workers, producing the profitable trucks and sport utility vehicles most in demand.