The government released the March trade figures yesterday (link provided above) and the good news for the Obama administration is that exports jumped, enough to put the U.S. back on track for his goal of doubling exports in five years. The bad news is that imports jumped even more, resulting in the trade deficit growing by another $1.0 billion. Here’s a chart of exports and imports vs. Obama’s goal.
Of course, Obama’s real goal, by doubling exports, is to restore a balance of trade, eliminating the trade deficit. By that measure, we’re not doing very well. Here’s a chart:
Returning to the issue of exports, even that news is a bit tainted when you look more closely. Of the $4.6 billion boost in exports, $0.9 billion was oil and other petroleum products (as if we need to be exporting oil), $0.7 billion was gold and other precious metals, and $0.1 billion was corn. None of which adds much in the way of jobs.
The big jump in imports was lead by oil, but included almost every other category as well.
At the current rate of increase, instead of eliminating the trade deficit in five years, we’re on track for it to explode to $100 billion per month – or $1.2 trillion per year. It was global trade imbalances that lead to the global financial collapse last year, and nothing has changed to avoid a repeat in years to come. Every month another $40 billion is drained from our economy, and another $40 billion comes back to the U.S. looking for a bubble to inflate. Right now it’s a bubble in U.S. treasuries which, when it bursts, will send interest rates through the roof.
But few Americans care about asset bubbles. What they do care about is jobs and nothing robs our economy of jobs like the trade deficit, which currently accounts for six million lost manufacturing jobs directly and millions of other jobs involved in supporting manufacturing operations.
Obama’s plan to export our way out of our trade deficit in five years is failing. As the global financial crisis fades from view, the trade deficit is slowly returning to the status quo in which rising exports are swamped by a rising tide of imports. Will it take a second global economic collapse (or a third?) to jolt him into meaningful action on trade policy? I wonder if even that would do it.