Last week the Bureau of Economic Analysis announced that the U.S. trade deficit fell by $3.1 billion to $44.1 billion. It was the second monthly decline in a row, but there’s little evidence of a long-term improving trend. Check out the chart: Balance of Trade. The general improving trend that was evident for a couple of years, beginning in early 2012, ended early this year when the rapidly worsening deficit in manufactured goods swamped a decline in oil imports. Though the deficit in manufactured goods improved by $3.0 billion in June, you can see from the following chart that a quickly worsening trend remains in place: Manf’d Goods Balance of Trade.
Most of the improvement in the manufactured goods deficit was driven by a decline in imports. (Such declines are usually followed by a big jump the following month.) But the improvement was also helped by a small $0.8 billion rise in exports. In January of 2010, President Obama set a goal of doubling exports within five years. Though he wasn’t specific about the type of exports, it’s reasonable to believe that the plan was for manufactured exports to contribute their fair share toward that goal. It didn’t happen in June. The $0.8 billion rise was less than half of the $1.8 billion it needed to rise in order to keep pace with the president’s goal.
Nothing new there. That’s been true nearly every month for the past three years. Exports have risen by only $0.7 billion since March of 2012, while they needed to rise by $42.4 billion to keep pace with the president’s goal. The result is that manufactured exports now lag the president’s goal by $45.9 billion – a record shortfall that exceeds the entire trade deficit. Here’s a chart that shows both manufactured exports and imports: Manf’d exports vs. goal.
Contrary to all the hype about a “manufacturing renaissance,” the decline of the manufacturing sector of our economy has continued unabated during the Obama administration. It’s not a surprise. The president has ignored the import side of the trade equation – the side he has the power to affect if only he had the will and courage to do so, and instead took the chicken’s way out, setting a goal for exports, over which neither he nor anyone else in the U.S. has any control, since it’s determined solely by foreign demand. In effect, he washed his hands of U.S. trade policy, but did it in a way that he hoped would give the appearance of being a champion for American workers. Shame on him.