The February report of trade in goods and services was released on the morning of Friday, April 5th, just as my wife and I were leaving the house for a 10-day trip, so this news is a bit stale. But I can’t let it pass without comment.
As we sat in the airport awaiting a flight, watching the news on the overhead monitor (I believe it was CNN), I saw a report titled “Manufactured Promises” in which they contrasted the lack of growth in manufacturing jobs to President Obama’s promise to add a million such jobs. This isn’t a surprise to anyone who follows the monthly release of international trade.
In February, the overall balance of trade improved slightly from January, continuing a slow trend that’s been underway for the past year. Here’s the chart: Balance of Trade. However, this slow, slight improvement in our overall balance of trade is due entirely to a slow-down in oil imports (and some slight improvement in services). Manufactured goods is an entirely different story. Our deficit in manufactured goods continues to worsen at a rapid clip. Here’s the chart: Manf’d Goods Balance of Trade.
In January of 2010, the president set a goal of doubling exports in five years. (The goal was less ambitious than it might have seemed, given that he was starting from a low level of exports that went along with the overall decline in trade during the “Great Recession.”) As the economy rebounded and, along with it, the overall volume of trade, exports kept pace with the increase required to meet that goal. (But, since imports rebounded just as quickly, no progress was made on reducing the trade deficit.)
However, beginning in October of 2011, the global economy has flattened out and no further progress has been made toward the less-ambitious-than-it-seemed goal of doubling manuactured exports. In fact, in the last twelve months, manufactured exports have actually declined slightly, instead of rising by $15.6 billion – the growth needed to keep pace with the president’s goal. Here’s the chart: Manf’d exports vs. goal.
None of this is a surprise. There was never any chance of manufactured exports meeting the president’s goal because he has no control over exports, which are driven entirely by foreign demand. The tactic of cajoling our trade partners to buy more American goods has yielded the same results for President Obama that it has yielded for previous presidents for decades – nothing. “Manufactured promises” indeed.