A big spike in imports swamped a smaller rise in exports in January, resulting in the worst U.S. trade deficit of the Obama presidency. Since January of 2010, when the president set a goal of doubling exports in five years, the trade deficit has worsened by 40%. This from a president swept into power on a promise to reduce unemployment by fixing our broken trade policy.
The trade deficit rose to $52.6 billion, easily surpassing the upwardly-revised December reading of $50.4 billion. Exports rose enough to recover some ground in the goal to double exports, but not much. Exports still lag the president’s goal by nearly $9 billion per month. In the more important category of manufactured exports (more important because that’s where the jobs lie), exports are lagging the goal by $11 billion per month.
So how has the economy been recovering through this? Credit an explosion in the federal budget deficit, gushing far more money into the economy than the trade deficit is sucking away – a situation that is completely unsustainable, even for a short period of time. More on this in my next post.