This morning the U.S. Bureau of Economic Analysis (BEA) released the U.S. International Trade in Goods and Services report for the month of November. (Link provided above.)
Bad news once again. The overall trade deficit was worse than expected, rising from $33.2 billion in October to $36.4 billion. Most of the rise was due to a big jump in imports of goods, both petroleum and non-petroleum goods.
To make it easier to understand the trend, I’ve decided to begin presenting this data in graphical form. Although the overall trade deficit is bad for the financial condition of this country, what I and all American workers should watch most closely is trade in non-petroleum goods. This is where the jobs are. While a trade deficit in petroleum drains money from our pockets, a trade deficit in non-petroleum goods drains jobs out of our economy as well. And the most meaningful way to look at this data is to express it as a percentage of real (adjusted for inflation) per capita (adjusted for population growth) GDP (gross domestic product). Any rise in this figure would indicate a downward pressure on jobs and incomes.
So here it is:
Some observations are in order:
- The trade deficit in goods is higher than the overall trade deficit due to a surplus in services. (Not tracked here.)
- In November ’08 the trade deficit began to plunge as the global economic crisis took hold.
- The decline in the trade deficit was led by petroleum, as both price and volume declined.
- Petroleum and non-petroleum goods accounted for roughly equal shares of the goods deficit prior to the economic collapse. Since then, the non-petroleum goods deficit has rebounded more quickly.
- The non-petroleum goods deficit continued to decline through June, but since then has rebounded very quickly, by 37%, and in November was the highest since January.
- In November, the goods trade deficit rose to 4.5% of real per capita GDP. In other words, every man, woman and child in America was 4.5% poorer as a direct result of the goods trade deficit. With real per capita GDP at $42,176, that’s a loss of almost $1,900 per person. Of that figure, the deficit in non-petroleum goods accounts for $1,060.
This is bad news for the Obama administration. Upon taking office he declared that the old economic paradigm in which other nations exported while the U.S. consumed was dead. It was unsustainable. He demanded a change and other nations agreed (with a wink and a nod). But now we see that the old paradigm is making a comeback, fueled by more U.S. debt. No surprise, since nothing substantive has been done to change it. But it can’t go on. That’s not opinion; it’s fact.
The question is how long Obama will remain silent and sit on his hands. How long will he let parisitic economies continue to dig the U.S. economy into a deeper hole and rob us of our manufacturing jobs? When our trade deficit plunged early in the year he had a golden opportunity to build on that momentum, implementing changes to trade policy that locked in and built upon those gains. But he blew it.
When will he deliver the change he promised? Or will he be content to go down in history as the president who restored the status quo and kicked the can down the road? Much to my disappointment and to the detriment of us all, he’s beginning to look like the latter.