This morning the Census Bureau released its report of U.S. International Trade in Goods and Services for the month of August. Here’s a link: http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
In January, President Obama set a goal of doubling exports in five years, the real goal being, of course, to reduce our trade deficit. I predicted this plan would fail for two reasons: (1) The U.S. has no control over exports, and (2) few countries have the ability to expand domestic consumption, which would drive a demand for imports from the U.S.
Since January we’ve been tracking Obama’s progress on this goal. The August data makes it clear that he’s slipping far behind. Here’s a chart of our progress vs. Obama’s goal:
Seven months into this plan, exports have risen at a pace that, if continued, would increase exports by 72% in five years, well below the goal of 100%. You may be thinking, “hey, that’s not so bad! Lighten up!” Oh, really? The problem is that imports have increased at a rate that, if continued, would increase imports by 257% in five years. Doing the math, this disparity in the rates of increase in imports vs. exports will leave us with an annual trade deficit of $2.548 trillion in five years!
Here’s a chart of the monthly balance of trade through August:
The following excerpt from the 2nd paragraph of the report pretty much tells the tale:
Exports of goods were virtually unchanged at $107.7 billion and imports of goods increased$3.9 billion to $166.7 billion.
The president has often blamed the profligate spending of his predecessor for the state of the economy he inherited, knowing full well that the real problem lay with the trade deficit, which exploded in the decade following the granting of MFN (most favored nation) status to China, opening the door to a tsunami of imports. Obama knows that the simplistic over-spending and deficit message plays better with the electorate. He asks if we want to go back to the same policies that created this mess in the first place. The fact is that his failure to take meaningful action on the trade deficit virtually assures another economic crisis.