Trade Deficit in Manufactured Goods At Record High

December 7, 2017

The trade deficit in manufactured products* rose to a record high of $64.6 billion in October, surpassing the previous record of $63.3 billion set in March of 2015.  Take a look at this chart of our monthly deficit in manufactured goods:  Manf’d Goods Balance of Trade. Exports of manufactured goods haven’t risen since September of 2011 (in spite of Obama’s laughable proclamation in 2010 that we would double exports in five years).  In the meantime, imports have soared by almost $30 billion.  It’s a dubious distinction for President Trump who, during his inaugural address in January, spoke of “…rusted-out factories scattered like tombstones across the landscape of our nation…” and proclaimed that “This American carnage stops right here and right now.”

To be fair, Trump didn’t mean that it would happen on the spot.  His administration has been taking steps to address our trade problem, trying to renegotiate NAFTA (the North American Free Trade Agreement with Mexico and Canada), imposing tariffs on some products and, most recently, blocking China from rising to “market economy” status with the World Trade Organization.  Aside from the work on NAFTA, which may conclude soon with the U.S. walking away from that ill-conceived agreement, the rest amounts to little more than the token steps taken by previous administrations.  The net result is that the plight of the manufacturing sector of our economy grows steadily worse.

Enough is enough.  It’s time to walk away from both NAFTA and the World Trade Organization and begin implementing tariffs.  Any tariffs would be better than our current trade policy, but smart tariffs that address the real cause of our trade deficit – attempting to trade freely with badly overpopulated nations characterized by bloated labor forces and anemic markets – would be much more effective.  As an example, it was reported yesterday that Canada, angered by their treatment in the NAFTA negotiations, has canceled an order for Boeing-made fighter planes.  Why are we treating Canada this way?  Sure, we have a trade deficit with Canada, but it’s due entirely to oil.  In 2016, our biggest trade surplus in manufactured goods, by far, was with Canada – $44 billion, more than double any other country.  Canada is our best trading partner.  Why anger them?  Why not tell Canada that our beef is with Mexico, with whom we had a trade deficit in manufactured goods of almost $68 billion in 2016 – our third worst behind China and Japan – and that they’ll get just as good a deal from the U.S. without NAFTA?  Slap the tariffs on Mexico, not Canada.

We could completely wipe out our trade deficit in manufactured goods by applying tariffs to only ten countries – China, Japan, Mexico, Germany, Ireland, Vietnam, South Korea, Italy, India and Malaysia.  These ten countries, all more densely populated than the U.S. (all but Ireland are many times more densely populated), account for all of our trade deficit in manufactured goods.  While we have defiicts with others, they are much smaller and are offset by surpluses with the rest of the world.  The point is, we don’t have to anger the entire world with tariffs – just ten out of the more than 220 countries in the world.  So let’s be smart about how we do it, but the time has come, Mr. President.  Stop delaying the inevitable.  Do what you know needs to be done.

* The trade deficit in manufactured products is calculated by subtracting services, trade in petroleum products, and trade in foods, feeds and beverages from total trade, as reported by the Bureau of Economic Analysis in its monthly reporting of international trade.

Advertisements

America’s Worst Trading Partners in 2015

May 19, 2016

It’s time for my annual ranking and analysis of America’s best and worst trading partners for 2015.  No surprise, it was another dismal year for American manufacturers, racking up the 40th consecutive year of trade deficits and setting a new record in the process – a deficit of $648 billion.  That surpasses last year’s record deficit by a whopping $109 billion.

Since the surpluses of trade with our best trade partners is overwhelmingly swamped by the deficits with our worst partners, let’s begin there.  This year I’m going to first present the list in the most basic terms – a list ranked in order of the sheer size of the deficits. Check out this list of America’s twenty worst trade partners in terms of our deficit in manufactured products:  Top 20 Deficits, 2015.

The nations at the top of this list should come as no surprise to anyone.  Trade with China dwarfs them all with a deficit of $367.5 billion – more than four times larger than our second largest deficit with Japan.  That’s not surprising when you realize that China has ten times as many people as Japan.  China actually accounts for about one fifth of the entire world’s population.  The following are some other key observations about this list:

  • Look at the population density of these nations.  The average population density is 737 people per square mile.  That’s eight times the density of the United States.  With only one exception – Sweden – every nation on this list is more densely populated than the U.S.  Most are much, much more densely populated.
  • Eight of these nations are wealthy European nations.
  • Over the past ten years, our trade deficit has worsened with 17 of these nations.  Most have worsened dramatically.  The nation with whom our balance of trade has improved the most (that is, with whom the deficit has declined the most in the past ten years) is Sweden – the only nation on the list less densely populated than the U.S.
  • Our trade deficit with Japan has actually declined by 18% over the past ten years.  Why?  Simple.  South Korea is “eating their lunch.”  Imports of South Korean cars – Hyundais and Kias, along with imports of South Korean appliances like those made by LG, Samsung and others – has cut into Japan’s market share.  Remember when President Obama signed a new trade deal with South Korea in 2012, proclaiming it a “big win for American workers?”  In three short years our trade deficit with South Korea jumped 50%.
  • Our fastest growing trade deficit is with Vietnam, growing by 440% in the last ten years.  Some may point to the fact that at $6100 per person, Vietnam has the lowest purchasing power parity of any nation on this list – only slightly better than India – and that this is the reason for the explosive growth in our trade deficit with them.  However, our second-fastest growing trade deficit is with Switzerland, a nation that is actually more wealthy (with higher wages) than the U.S.  What Vietnam and Switzerland do have in common is a high population density.  It’s the one thing that (nearly) all of these diverse nations have in common.

Many people will look at this list and quickly conclude that, when it comes to our trade deficit, the problem is China and so that’s where we should focus.  Somehow, some way, they’re obviously not playing fair with us.  They’re manipulating their currency, they’re ignoring workers’ rights.  They’re trashing the environment.  And so on.  So let’s get tough with China.

The problem is that China can legitimately complain that of course our deficit with them is big, simply because they are a big nation.  Person-for-person, our trade deficit with Japan is worse.  OK, so in an effort to be fair, let’s broaden our efforts to include Japan.  “Not so fast!” the Japanese will complain.  “What about Germany?  Their surplus with you is nearly as large and they have only half as many people as we do!”

The point is that in determining the root cause of these enormous deficits in order to formulate an effective trade policy, we need to factor out of the equation the sheer size of these nations.  Let’s determine who are really our worst trade partners on a person-for-person basis.  So here’s a list of our worst trade partners in terms of the per capita trade deficits:  Top 20 Per Capita Deficits, 2015.

Now we can see what a mistake it would be to simply conclude that China is the problem.  In per capita terms, they barely make the list of the top twenty worst deficits.  In fact, there are now ten European nations on this list and, in per capita terms, our trade deficit in manufactured products is worse with all ten of them than it is with China.  Here are some more key observations about this list:

  • Once again, all but two of the nations on this list – Sweden and Finland – are more densely populated than the U.S.  Most are far more densely populated.  Only three have population densities less than the median population density of the world, which is 184 people per square mile.  One – Ireland – is right on the median.  The other 80% of the nations on this list are much more densely populated.
  • Most of these are wealthy nations, with an average purchasing power parity of $44,370 per person.  In fact, the top of the list is dominated by the wealthiest.  Clearly, the argument that low wages cause trade deficits doesn’t hold water.  If anything, the cause and effect is exactly the opposite.  Running large trade surpluses makes nations wealthier.
  • There is one nation on this list that is a net oil exporter – Mexico.  I point this out because oil is priced in U.S. dollars, and every dollar spent on oil produced by foreign countries must be repatriated to the U.S., since that is ultimately the only place where they are legal tender.  Those dollars are repatriated in several ways, primarily through the purchase of American bonds or through the purchase of American goods.  The latter tends to make net oil exporters strong buyers of American products, which usually means that the U.S. enjoys a surplus of trade in manufactured products with such nations.  But not Mexico.  What this means is that the large trade deficit in manufactured goods that we have with Mexico is actually even worse than it appears.  For a nation whose population density is one of the lowest on the list – less than twice that of the U.S. – it means that something beyond population density – such as some unfair trade practice – is at work here.  Ditto for Ireland, which has fashioned itself into a tax haven for manufacturers, virtually bankrupting itself during the “Great Recession” of a few years ago.

If you are seeing such data for the first time, it may be a little early, based on this data alone, to conclude that population density is the driving force behind trade imbalances.  More proof is needed.  If such a relationship exists, then we should see exactly the opposite at the other end of the spectrum.  We should see a list of America’s best trade partners – those with whom we have trade surpluses – loaded with nations with low population densities.  We’ll take a look at that list in my next post.

If you’re already acquainted, however, with the relationship between population density and trade imbalances, which I explored thoroughly in Five Short Blasts, then this data is just further proof that population density is, in fact, the driving force behind these trade imbalances.  Such deficits are inescapable when applying free trade theory, which fails to account for large disparities in population density, to such nations.  It will only get worse with each passing year, exactly as we have seen.

 


Americans Growing Poorer

September 19, 2015

http://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf

The above-linked report – “Income and Poverty in the United States:  2014” – was published by the Census Bureau a couple of days ago.  The news isn’t good.  In spite of the supposed decline in unemployment and all the talk of economic recovery, the median household income fell once again and the poverty rate remained at or near the highest level in fifty years.

There’s tons of data to sift through in the report, so I’ll simply quote a few of the key findings of the report:

“Median household income was $53,657 in 2014, not statistically different in real terms from the 2013 median of $54,462 (Figure 1 and Table 1). This is the third consecutive year that the annual change was not statistically significant, following two consecutive years of annual declines in median household income.”

“Median household income … in 2014 … 6.5 percent lower than the 2007 (the year before the most recent recession) median ($57,357), and 7.2 percent lower than the median household income peak ($57,843) that occurred in 1999.”

“In 2014, the official poverty rate was 14.8 percent. There were 46.7 million people in poverty.”

“The 2014 poverty rate was 2.3 percentage points higher than in 2007, the year before the most recent recession (Figure 4).”

Median household income has declined every year since 2007, and even the median income in 2007 was less than the median income in 1999.  This is the longest period of decline since the Census Bureau began tracking the data in 1967.  From 1967 to 1999, the median household income (for all races) rose from approximately $42,000 to $57,843 – a increase of 38%.  Since 1999, however, it has declined by 7.2%.

This is exactly what the inverse relationship between population density and per capita consumption would predict – that as our population density (including our “effective” population density) rises beyond a critical level, worsening unemployment and poverty is inescapable.

So what was it that happened after 1999 that threw median incomes into what increasingly appears to be a permanent state of decline?  Our population density has been rising by about 1% a year for decades but our “effective” population density – the population density that we take upon ourselves when we combine with another nation through “free” trade – skyrocketed in 2000.  That was the year that the Clinton administration granted China “permanent normal trade relations” satus, opening the door to “free” trade with China.

Look back at Chapter 7 of Five Short Blasts (especially Figure 7-5 on page 130), where we examined what happened to our effective population density as we combined our economy with other nations through “free” trade.  The effect of trading with Ireland – the nation with whom we have the largest per capita trade deficit in the world – is negligible.  They’re so small that it makes no change to our effective (combined) population density.  Add Mexico to the list, and our density rises from 85 people per square mile to 118.  Add Germany and it rises to 132.  But, when China, with one fifth of the world’s population, is added to the mix, our effective population density rockets to 242!  The downward pressure on our labor market and incomes suddenly becomes overwhelming.

As long as we continue to blindly apply “free” trade policy to all nations with no consideration of the effect of population density, the resulting downward spiral in our economy is inescapable.  With each passing year, the data on incomes and poverty in America bears this out.

 

 

 

 

 


America’s Worst Trade Partners in 2013

May 26, 2015

Top 20 Deficits, 2013

In a recent previous post, I reported that the U.S. suffered a record trade deficit in manufactured goods with those half of nations above the median population density, and a healthy surplus with the other half of nations. The relationship between population density and trade imbalance is clear.

To make it even more clear, let’s take a look at the opposite ends of the spectrum of trade imbalances – those nations with whom we have the worst trade deficits in manufactured goods and those nations with whom we enjoy the biggest surpluses. This post will look at the top twenty deficits. In order to factor out the geographic size of nations as a factor, these trade imbalances are expressed in per capita terms – dollars per person.

Above is a link to a spreadsheet showing the top twenty per capita trade deficits in manufactured goods in 2013. The following are some observations about this list:

  • Of these top twenty nations, eighteen are more densely populated than the U.S. Most are much more densely populated. The average population density of the nations on this list is 504 people per square mile. This is almost six times the population density of the U.S.
  • The thing that may surprise people the most is that China, the nation everyone thinks of first when the subject of our trade deficit comes up, barely makes the list of the top 20 deficits, coming in at number 17. In per capita terms, our deficit with other nations including Israel, Taiwan, Japan, South Korea and a number of European nations, is much worse.
  • Low wages are often blamed for our trade deficit in manufactured goods. Manufacturing jobs, it is said, are shipped overseas to take advantage of cheap labor. So I’ve included the “purchasing power parity” (or “PPP”) – essentially the gross domestic product of each nation per person – to see whether this claim holds water. PPP is a measure of the purchasing power of the citizens of each nations, and is a good indication of the average wages paid. As you can see, our worst deficit are with rather wealthy nations. (By comparison, the PPP of the United States in 2013 was $49,000.) The average of PPP of these twenty nations is $35,330. Only two nations are below $10,000: China and Nicaragua. It should be noted that China’s PPP has more than doubled in the last eight years. If “low wages” were the cause of trade deficits, then we should begin to see our deficit with China decline as PPP rises. Instead, our trade deficit with China set a record in 2013. Our trade deficit with Switzerland, the wealthiest nation on this list, also worsened in 2013 to $1,859 per person from $1,680 in 2012, moving Switzerland from 3rd to 2nd place on this list.
  • South Korea moved from 12th place in 2012 to 11th place in 2013 as our trade deficit with them worsened from $426 to $496 per person. Our deficit with South Korea continues to worsen dramatically in the wake of the 2012 trade deal which the Obama administration hailed as a “big win for American workers.”
  • In the most dramatic move on the list, Malaysia went from 13th place in 2012 to 21st place – vanishing from the list – as our trade deficit with them was cut in half in 2013. This allowed Mexico to move up to 13th place in spite of a 20% decline in our deficit.

There are a couple of key take-aways from this list. First is that population density plays the major role in determining trade imbalances. If it did not, one would expect the ratio of more densely populated nations to less densely populated nations to be somewhere around 1:1. Instead, the ratio here is 9:1. Secondly, low wages clearly have absolutely nothing to do with these trade deficits. This list is heavily skewed toward wealthy, high-wage nations like Ireland, Switzerland, Germany, Japan, Israel, Taiwan, Denmark and others.

The problem with attempting to trade freely with these badly overpopulated nations is not that their wages are too low. The problem is that they buy too little from the U.S., thanks to a level of per capita consumption that has been decimated by their extreme population densities. People who live in such crowded conditions simply can’t consume products at the same level as people who live in more reasonably populated conditions like we enjoy in the U.S.


America’s Top 15 Trading Partners in 2013

February 20, 2015

Here’s a chart showing America’s top 15 trade partners (in terms of the percentage of total imports and exports) in 2013:  Top 15 Trading Partners in 2013.  First, some general observations are in order.

  • There are 229 nations on earth.  These fifteen nations alone account for nearly three quarters of all U.S. trade.
  • These fifteen nations represent approximately one half of the world’s population.
  • Those not well-versed in U.S. trade data are probably surprised to see Canada at the top of the list.  It’s not such a surprise when you learn that Canada is America’s largest supplier of oil and gas.  Canada’s share of U.S. trade rose in 2013 to 16.4% from 16.1% in 2012.
  • Second on the list is China – not such a surprise.  China’s share of U.S. trade also rose in 2013 to 14.6% from 14% in 2012.
  • Third is Mexico, with their share of U.S. trade rising to 13.2% from 12.9% a year earlier.
  • These three nations – Canada, China and Mexico – account for about 44.2% of all U.S. trade.
  • Japan, fourth on the list, saw its share of U.S. trade slip from 5.7% to 5.3% in 2013.
  • South Korea leapfrogged ahead of the United Kingdom on the list, rising to sixth place while the U.K. slipped to seventh.
  • France rose from 10th place in 2012 to eighth place in 2013, while Brazil and Saudi Arabia each slipped a notch.
  • Venezuela, 14th on the list in 2012, fell off the list in 2013 and was replaced by Switzerland.

The above list is based on total imports and exports of all goods and services.  But what really matters is manufactured products, since jobs are concentrated in that category.  Exports add jobs to an economy, and imports take them away.  A trade deficit in manufactured products represents a net loss of jobs.  So let’s turn our focus to that category of trade.  I should note here that, from this point on, trade imbalances will be expressed in per capita terms in order to factor out of the equation the sheer size of nations.  If the U.S. has a deficit of $1 billion with a nation of one million people and a deficit of $100 billion with a nation of 100 million people, it would be wrong to conclude that the people of the latter nation are a bigger drag on our balance of trade, since the people of both nations export $1,000 more to the U.S. than they import from us.

Of these fifteen nations, twelve are more densely populated than the U.S. and three are less densely populated.  With the three less densely populated nations, the U.S. enjoys a surplus of trade in manufactured products with all three – Canada ($1,988 per person), Brazil ($112 per person) and Saudi Arabia ($595 per person).

On the other hand, of the twelve nations more densely populated than the U.S., we suffer a trade deficit in manufactured goods with all but one of them – The Netherlands.  The Netherlands has an unusual economy.  As the only nation in Europe with a seaport on the Atlantic coast, it’s economy is heavily focused on trade, buying from the U.S. and then re-selling to other nations.  This is the reason that the U.S. enjoys a healthy surplus with The Netherlands.  Of the remaining eleven nations more densely populated than the U.S., our per capita trade deficits with them rank as follows:

  1. Switzerland:  -$1,859
  2. Germany:  -$822
  3. Taiwan:  -$706
  4. Japan:  -$696
  5. S. Korea:  -$496
  6. Mexico:  -$335
  7. Italy:  -$319
  8. China:  -$259
  9. France:  -$208
  10. U.K.:  -$30
  11. India:  -$11

Surprised?  If you’ve read Five Short Blasts, then you’re not surprised at all.  You understand how population density (and almost nothing else) drives trade imbalances.  When expressed in per capita terms, our enormous trade deficit with China (enormous because of its sheer size and population) seems rather mundane.  Others are much worse because they are much more densely populated than China.  In fact, if we plot our per capita trade deficit in manufactured goods versus population density, we find that the data follows a line that describes a logarithmic decay in our balance of trade as population density rises:  Per Capita Balance of Trade vs. Pop Density.

As you can see, trade with nations less densely populated than the U.S. (about 86 people per square mile) will almost surely be beneficial to the U.S. and produce a trade surplus.  Trade with more densely populated nations will result in a trade deficit and a drag on the U.S. economy.  The U.S. began trading freely with the other nations on this list long before we began trading freely with China in 2000.  For those who understand the role of population density in driving trade imbalances, it would have been easy to predict the results – a huge trade deficit.  In fact, the results of our trade policy with China fall very neatly along that line.

Some argue that trade deficits are caused by low wages in places like China.  Look again at the above list.  Low wages?  Not in Switzerland.  And not in most of the other nations on that list.  In fact, wages in China have risen dramatically and our deficit with them has only gotten worse.  To better understand the real relationship between wages and trade, take a look at this chart that plots PPP (purchasing power parity, analogous to average wages) vs. our balance of trade with our top fifteen trade partners:  Per Capita Balance of Trade vs. PPP.  The truth is that when trading with very poor nations (where wages are very low), we experience neither a large trade deficit or surplus.  As you can see, the relationship between trade imbalance and the wealth of nations forms an almost perfect “V”.  On the right side of the chart (which represents trade surpluses), the per capita surpluses grow larger as the wealth of our trading partner increases.  On the left side of the chart (representing trade deficits), the deficits with wealthy nations are larger than those with poor nations.

When you think about it, this makes sense.  Those nations on the right side (the surplus side) of the chart are less densely populated nations.  Their citizens are capable of consuming products and they are resource-rich, enabling them to produce products and have a self-sufficient economy.  Because they are wealthy, they are able to import products from America.  The right side of the chart, however, is populated with very densely populated nations where their citizens have insufficient space to consume at a high level, and they are resource-poor.  They are heavily dependent on manufacturing for export to sustain viable economies.  Poor people can’t buy and import products.  That’s why there are no big trade deficits (in per capita terms) with poor nations.  Once manufacturing is introduced into their economies, however, wages begin to rise and they are then able to begin importing some products.  That’s why the trade deficits are larger with wealthier nations – because our trade deficit has made them wealthier.  It should be noted, however, that the trade deficit we have with them is never reversed.  Regardless of how wealthy they become through manufacturing for export, it is still impossible for them to consume at a high level.

China is a good case in point.  Trade with China started at a low level.  Once it started, wages in China began to grow and they have the fastest-growing economy in the world.  But, as wages have risen in China, our trade deficit with them has actually accelerated instead of moderating, as the low-wage theory would predict.  It has accelerated because the Chinese are incapable of consuming at a high enough level to restore a balance of trade.  Contrast this with a poor, sparsely-populated country.  If manufacturing is introduced there, we will have a trade deficit with them for a brief period of time, but wages will quickly rise as their labor supply is quickly exhausted, and their wealth will quickly enable them to begin importing American goods.  A balance of trade is soon restored.

All of this illustrates just how foolish it is to apply free trade policy equally to both sparsely-populated and densely-populated countries and expect the same results.  Free trade with badly overpopulated nations is a sure-fire loser, guaranteed to produce large trade deficits and to devastate the manufacturing sector of the economy.  It has nothing to do with low wages; nor does it have anything to do with currency valuations, which I’ll cover in an upcoming post.  Our enormous trade deficit is driven almost entirely by attempting to apply free trade policy to nations that are severely overpopulated.

 


Exports Lag Obama’s Goal by Record Margin in November

January 8, 2015

http://www.bea.gov/newsreleases/international/trade/2015/pdf/trad1114.pdf

As reported by the Bureau of Economic Analysis (see above link), the overall trade deficit contracted by $3.25 billion in November, due entirely to a drop in oil imports.

That was the good news.  The bad news is that the deficit in manufactured goods rose by $1.2 billion, thanks entirely to a $2.8 billion decline in exports.  After hitting a record in October, manufactured exports fell to their lowest level in five months.  In fact, since June of 2013, manufactured exports have risen by only $1.8 billion.

In January, 2010, President Obama set a goal of doubling exports within five years.  In November, exports lagged that goal by $54.7 billion per month – a record.  There are now only two months to go until the data for January, 2015 is released.  So far, instead of rising by 100%, exports have grown in five years by only 32%, all of which can be explained by inflation and by the rebound in the global economy – a rebound now faltering.  Absolutely none of the increase is due to any improvement in America’s trade position relative to other countries.  Here’s an update of the charts:

Manf’d exports vs. goal

Manf’d Goods Balance of Trade

Obama set this goal because he naively believed that there was no reason that the U.S. couldn’t become a net exporter like Germany.  There is, of course, one very big reason – the inverse relationship between population density and per capita consumption.   Germany is five times as densely populated as the U.S., making its per capita consumption a fraction of ours.  Like the citizens of so many other badly overpopulated nations (Japan, China, Korea and much of Europe, just to name a few) they can’t even absorb their own productive capacity, so why would they buy products from us?  (Well, they do, but not nearly as much as they export.)

Obama ran in 2008 on a platform that included tackling our trade deficit.  He took the coward’s way out, choosing to ignore the import problem, which everyone knows is where the real problem lies, focusing instead on exports in order to avoid unpleasant confrontations around the punch bowl at G8 meetings.  Aside from making the promise to double exports, he never lifted a finger to do anything to make it happen.  He’s done nothing to address the imbalances of globalization which nearly collapsed the global economy in 2008, and it’s going to come back to bite us.


Trade Deficit in Manufactured Goods Soars to New Record in September

November 4, 2014

http://www.bea.gov/newsreleases/international/trade/2014/pdf/trad0914.pdf

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.