Trade Deficit Rises to Worst Level Since June

The Bureau of Economic Analysis announced this morning that the November trade deficit rose to -$47.8 billion, its worst level since June, as imports rose by nearly $3 billion and exports fell by $1.5 billion.  (Click here for the report.)

The trade deficit with Germany rose to just below the record level set in October of 2005.  The 2o11 trade deficit with China is only $1 billion below the record set in 2010, and that’s with a full month to go in 2011.  The only question is whether the trade deficit with China will top $300 billion. 

The U.S. trade deficit continued its slow but steady worsening since President Obama, in January of 2005, set a goal of doubling exports in five years.   Here’s the chart:  Balance of Trade

Exports failed to meet the president’s goal for the fourth straight month although, until November, exports tracked very closely to the president’s goal.  But, in November, exports lagged the president’s goal by over $7 billion, by far the worst lag since the goal was set.  Here’s the chart:  Obamas Goal to Double Exports

But the real goal, of course, is to double exports of manufactured products, since that’s where the real opportunities for job creation lie.  Here the news is even worse.  Exports of manufactured products lagged the president’s goal for the seventh consecutive month, by more than $10 billion.  Here’s the chart:  Manf’d Goods Balance.  As you can see, exports of manufactured products have fallen completely off the track for attaining the president’s goal. 

No surprise.  The president has done absolutely nothing to stem the tide of imports and bring American manufacturing jobs home.  Contrary to his promise to rewrite NAFTA to correct the trade problems with Mexico, he’s done absolutely nothing except turn tail and run as soon as Mexico was angered by the suggestion.  Contrary to his promise to get tough with China, he’s resisted efforts by Congress to label that nation a currency manipulator, which would open the door to punitive tariffs.  He’s done nothing but talk and put on shows like his forum this week for insourcing American jobs. 

Romney has promised to slap China with the “currency manipulator” label on day one of his administration.  Do I believe it would be anything more than a symbolic gesture, or that he would then actually follow through with tariffs?  No.  But Obama proved himself a liar when he made a similar pledge, and I’m fed up with Obama’s timidity on the trade issue.  I’m thinking the time is here to give Romney a chance.

6 Responses to Trade Deficit Rises to Worst Level Since June

  1. Mark Hall says:

    THANK GOD we have new “trade” agreements with developing nations like India and Vietnam to help increase our exports.

    Oops! For 2011 we will also have record trade DEFICITS with both of these countries.

    Question! Who will be the next victim (beneficiary) of our “pro” American Trade Policy?

    • Pete Murphy says:

      You’re right, Mark, our trade deficit with both India and Vietnam already exceed the annual records, with a month still to go. At the rate at which our deficit with Vietnam is growing, they’ll soon crack the list of our top twenty per capita trade deficits in manufactured goods.

      I read an editorial a couple of days ago (in fact, I intended to post on the subject and still might if I can find it again) in which the author blamed Japan’s economic woes on its stagnant population. Nonsense. The real problem for Japan is that all of these other emerging economies are muscling in on their export business with the U.S.

  2. Ken Hoop says:

    Romney would be the first vulture capitalist to do tarrifs, wouldn’t he?

    • Pete Murphy says:

      He’d be the first in the memory of anyone still living. However, let’s not forget that tariffs were the norm prior to 1947, embraced by Republicans and Democrats, vulture capitalists and venture capitalists alike. Back then, everybody (in the U.S.) loved them.

      I haven’t deluded myself into believing that Romney would implement tariffs. However, slapping China with the “currency manipulator” label might be just what it takes, not to start a trade war, since we’ve been in one for decades, but to wake up this country to the fact that we’ve been in one and we’re losing it because we haven’t even put up a fight. Maybe China would respond with some stupid gesture that would be just enough to really rile people up.

  3. ClydeB says:

    This exposes one of those circular firing squad scenarios. We label China as a currency manipulator – they respond with a threat to cut off their purchases of our debt – we panic(since we’re firing blanks) – apologize and increase our borrowing, all the while the deficit grows and the number of manufacturing jobs shrink.

    One ray of hope is that more and more people are looking for Made in the USA labels and leaving made in china ‘stuff’ on the shelf.

    Personally I don’t think we have enough time for this tactic to develop results, but at least some folks are coming to the realization that something need to be done.

    • Pete Murphy says:

      The threat to halt purchases of our debt is a hollow threat. It’s already happened on occasion and other buyers have stepped in to pick up the slack. Even the Federal Reserve can buy it. Besides, while the demand for our bonds may drop a little if China’s out of the picture, the supply of new bonds will drop just as fast when there’s less need for deficit spending to offset the trade deficit.

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