Analysts View Trade Deficit Through Rose-Colored Glasses

Economists and other idiots, incapable of analyzing data that goes any further back than the most recent data point, hailed the statistically insignificant $0.7 billion drop in the May trade deficit, released Friday by the Commerce Department, as evidence of a shrinking deficit and rising exports. If they looked back just one more data point to March instead of April, a time frame that exceeds their memory capability, they’d be looking at a more significant rise in the deficit instead of a decline. And if they looked back even further – like a year or even five years – they’d see that there’s no decline at all. The trade deficit remains stuck at about $60 billion per month, steadily sucking the life blood from our economy to feed a swarm of parasite mosquitoes in a process known as “globalization.”

The following is the most idiotic statement in the whole article:

The strength in the trade sector, which is often blamed for U.S. job losses, shows how the mortgage market crisis has turned the U.S. economy “on its head,” said Joel Naroff, president and chief economist of Naroff Economic Advisers.

“Housing is now the ‘American Nightmare’ while trade is our salvation,” Naroff said.

Only an economist could look at a $720 billion per year trade deficit and see it as “our salvation.” Satan himself couldn’t do a better job of making the fires of hell seem cool, refreshing and appealing.

Here’s the next dumbest statement:

… Gutierrez (U.S. Commerce Secretary) … urged Congress to give exports a further boost by approving free trade pacts with Colombia, South Korea and Panama that have been stalled since last year.

Trade agreements with Colombia and Panama would be inconsequential, but only a fool would suggest that a free trade pact with Korea would “give exports a further boost.” Korea is perfectly free to buy all the American products they want right now. We’re not standing in their way! We need look no further than our free trade results with Japan to see how well a free trade pact with Korea would work. Korea is even far more grossly overpopulated than Japan and, consequently, even more incapable of consuming American products. (See Five Short Blasts for a better explanation of the reason.)

There are two key take-aways from all of this data:

U.S. imports rose 0.3 percent to a record $217.3 billion. Overall imports of non-petroleum goods set a record, as did three smaller categories: food, feeds and beverages, capital goods and consumer goods.


The closely watched trade deficit with China widened 4 percent in May to $21.0 billion. However, for the first five months of 2008, the gap totaled $96.0 billion, virtually unchanged from the same period last year.

I guess we’re supposed to draw some comfort from that last sentence. It’s like telling a drowning man that the water is only just slightly over his head.

Unbelievable. Our economy stands on the brink of collapse, with our biggest financial institutions drowning in debt and government-issued securities looking more like “junk bonds” every day, and still economists can simply shrug off a monthly $60 billion deficit. The universities who “educated” these people should be ashamed of themselves.


4 Responses to Analysts View Trade Deficit Through Rose-Colored Glasses

  1. Hi Pete,
    I feel your frustration coming right out of my computer screen. I often compare the U.S. version of free trade to having the Denver Bronco’s come over and play the local high school in an effort to level the playing field of organized sports. Sure there will be casualties, but all in the name of fairness.

    The U.S., much due to our inaction on energy, also exports $700 Billion American greenbacks per year to purchase foreign oil. Imagine the impact of that money staying in this country?

    And finally, Will Rogers said, “An economist’s guess is likely to be as good as anyone else’s.”

  2. Steve Padovan says:

    I agree with with Pete and Mike. The amount of reduction in the deficit is miniscule. However, if you discount the substantial increase in the cost of imported oil, then the trade picture in other goods has been significantly improved. I believe THAT is the point the “economists” are trying to make. For example, oil imports now make up over half of our monthly deficit whereas in 2004 it was 20%, meaning that our deficit in goods was much larger in the past than now. Census date on trade and petroleum is available at

  3. Clyde Bollinger says:

    “The universities who “educated” these people should be ashamed of themselves.” This is really making a large assumption, Pete. There is NO evidence that any form of education took place. GI-GO. Our best hope is that we can keep it off our shoes as they regurgitate their stream of garbage. It has been years since there was an innovative idea spawned in the field. It is the same old drivel, over and over. It is as if we are running the store that loses money on every sale, “but just look at the volume we’re doing”.
    Is any one with clout paying any attention? I’m disappointed at the lack of responses to your very well thought out postings. Keep up the pressure, someday, hopefully before it is too late, things can be rurned around.

  4. Pete Murphy says:

    Thanks for the comments. Mike, we have an annual trade deficit of over $700 billion, but only about $231 billion is for oil (but climbing). Virtually all of the rest is a trade deficit in manufactured goods.

    Steve, welcome to the site. Actually, the data doesn’t show much improvement in the trade picture for manufactured goods. In 2006, the deficit in manufactured goods was about $460 billion. In May, the deficit in manufactured goods was about $38 billion – an annual rate of about $456 billion. In May, oil accounted for $31 billion. These two pieces of the deficit add up to $69 billion – more than the whole May deficit. That’s because of a small surplus in services. We hear a lot these days about exports climbing. That’s the “headline” that free trade cheerleaders want us to hear. If you dig deeper you’ll find that the increase in exports is due primarily to skyrocketing grain prices. Virtually none of it is in manufacturing, where the jobs are.

    I don’t mean to minimize our trade deficit in oil. It’s just that my theory has more significant ramifications for manufactured goods in our foreign trade picture. However, population growth at home has certainly been the major factor in driving the oil deficit. When I was a kid, our population was half of what it is today and America produced 100% of its own energy needs. No plan to break our dependence on foreign oil can be taken seriously if it doesn’t include plans to at least stabilize and, better yet, reduce our population to an optimum level.

    Clyde, from everything I’ve read and heard about starting a new blog, it does take quite a while to build up a following and attract attention. I’m not sure when you started visiting the site, but I actually had to abandon my first attempt on the web site because it became so badly infected with spam that blog search engines were ignoring it. I kept the web site but moved the blog to this new site. I’m actually attracting a lot more readers that what you see, but few take time to comment. I’m getting 50-75 post views per day and it’s slowly climbing. Don’t worry, I have every intention of persevering here! Keep visiting and commenting!

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