The trade deficit news, released by the Bureau of Economic Analysis this morning (see the above link) couldn’t have been much worse. The headline number was bad enough. The deficit rose unexpectedly in December to $46.6 billion – the worst showing in over two years. From 2012 through 2013, the overall trade deficit had been trending in a slightly positive direction. But through 2014, it has once again taken a turn for the worse. Here’s the chart: Balance of Trade.
But the news gets even worse when you examine the details. The deficit in manufactured products soared to $52.8 billion – shattering the previous record of $49.8 billion, set only four months earlier. Here’s the chart: Manf’d Goods Balance of Trade. The growth in this deficit was driven by a $2.5 billion rise in imports and a $0.9 billion contraction in exports from the previous month. In spite of the president’s vow to double exports in five years (a goal set in January, 2010), exports have risen by only $0.3 billion since March, 2012. (Here’s the chart: Manf’d exports vs. goal.) To keep pace with the president’s goal, they needed to grow by $53.7 billion. If they had, we’d now have a trade surplus and we’d be enjoying full employment, rising incomes and prosperity. Instead, our economy is now hemorrhaging over $600 billion per year thanks to the president’s trade policy failure.
There’s more bad news in the report, which I’ll address in a future post.