As announced by the Bureau of Economic Analysis this morning, the overall trade deficit rose by $3.0 billion to $43.0 billion in September, driven entirely by a steep rise in the deficit in manufactured goods – which rose by $3.9 billion to $52.1 billion – a new record. (Check the chart: Manf’d Goods Balance of Trade.)
The expansion of the deficit in manufactured goods was driven mostly by a sharp decline in exports. September exports of manufactured goods fell to $111.9 billion. That’s only $0.2 billion higher than in March, 2012. Over that same time frame, manufactured exports needed to rise by $48 billion to keep pace with President Obama’s promise (made in January, 2010) to double exports within five years. Here’s the chart: Manf’d exports vs. goal.
In September our trade deficit with China soared to $35.6 billion, completely obliterating the previous record of $30.9 billion set only two months earlier. Imports from China rose by $5.1 billion in September while exports to China fell by $0.3 billion.
The entire trade deficit in September is due to only four countries: China ($35.6 billion), Germany ($6.1 billion), Japan ($5.3 billion) and Mexico ($4.8 billion). All four nations are more densely populated than the U.S. China’s population density is four times that of the U.S. Germany’s is eight times. Japan’s is ten times. Mexico is only about twice that of the U.S. Take away these four countries and the U.S. actually had a surplus of trade with the rest of the world.
Expressed in per capita terms (which factors out the sheer size of nations), the trade deficit with Germany was the worst of these four nations at approximately $100 per German citizen. Mexico and Japan were nearly tied at about $43 and $41 respectively. China was last at $29. It’s important to note that Germany and Japan are both high wage nations, disproving the theory that trade deficits are caused by low wages.
Today, Americans went to the polls in a sour mood. They’re unhappy with falling incomes and trumped-up employment reports. They’re fed up with a president who’s more concerned with illegal aliens than he is with the plight of American workers. And they’re sick of inaction on trade policy that’s has been a proven loser for decades, stripping them of their ability to make a decent living. They’re right to be angry. Since President Obama made his promise to double exports, our trade deficit in manfactured goods has nearly doubled while exports have barely budged. There’s been no follow-through and there was never a plan. Just a proclamation and crossed fingers.
Voters are in a “throw-the-bums-out” frame of mind. If the president had been on the ballot, he’d surely have been the first “bum” to go.