Trade Deficit Continues Its Drag on Recovery

Tuesday, 03 Dec 2013 06:59 AM

By Peter Morici Twitter @pmorici1

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The Commerce Department is expected on Wednesday to report the deficit on international trade in goods and services was $40.0 billion, up from $24.9 billion when the economic recovery began.

The Obama administration's ill-conceived energy policies and appeasement of China and Japan are responsible for this jump in the trade deficit. Every dollar spent abroad for imported petroleum and consumer goods that does not return to purchase exports is lost demand for U.S. goods and services and slows the pace of economic growth.

All that Black Friday and Cyber Monday shopping won't do much to boost the economy if the store shelves are stocked with ever-more imported goods. And since the economic recovery began, consumer spending is up 18 percent since the economic recovery began, whereas the trade gap has jumped 47 percent.

Editor’s Note: Obama Donor Banned This Message (Shocking)

Businesses, consequently, remain pessimistic about demand in the U.S. market and are reluctant to invest. With the majority of U.S. businesses subject to higher personal, as opposed to corporate rates, more onerous and costly regulations and paying more for employee healthcare, they remain reluctant to hire and continue to offshore jobs.

Sequestration only subtracted about $65 billion from actual government spending this year, and its impact pales by comparison to the $180 billion increase in the annual trade deficit and the $200 billion January tax jolt.

Fracking in the lower 48 states has not delivered enough new oil, and a full push on U.S. potential in the Gulf, off the Atlantic and Pacific coasts and in Alaska could cut import dependence in half. Shifting federal subsidies from electric cars, wind and solar to more fuel-efficient internal-combustion engines, plug-in hybrid vehicles and liquefied natural gas in rail and trucking could slice imports by another 25 percent.

Lower natural-gas prices substantially improve the international competitiveness of industries like petrochemicals, fertilizers, plastics, and primary metals. However, the Department of Energy's push to boost liquefied gas exports will handicap growth and create millions fewer jobs than keeping the gas at home for manufacturing and alternatives to diesel in transportation.

China systematically undervalues its currency against the dollar to keep its goods cheap in the United States. China steals technology, subsidizes exports and imposes high tariffs on imports, while effectively distracting the Obama administration from these commercial issues with measured intransience on cyber-security and nuclear issues in North Korea.

Other Asia governments, most recently Japan, have adopted similar currency strategies to boost exports. For example, the jump in the value of the dollar against the yen gives Toyota at least a $2,000 advantage pricing of the Camry against the Ford Fusion. That may not show up in the list price but it gives Toyota's importing arm in the United States the latitude to pack cars with better features and more aggressively discount.

No surprise the trade gap with Japan is up about 350 percent since the economic recovery began, and the full brunt of the cheap yen policy is yet to be seen.

Economists across the ideological and political spectrum have offered strategies to combat predatory currency policy and force China and others to abandon mercantilism.

However, China, Japan and others, offering only token gestures and deflecting rhetoric, exploit President Obama's weakness on economic issues — the Obama policy of appeasement is wrecking the U.S. recovery.

Cutting the trade deficit by $300 billion, through domestic energy development and conservation, and forcing China and others' hands on protectionism would increase GDP by about $500 billion a year and create well more than 4 million jobs.

Cutting the trade deficit in half would raise long-term U.S. economic growth by one to two percentage points a year. But for the trade deficits of the Bush and Obama years, U.S. GDP would be 10 to 20 percent greater than today, and unemployment and budget deficits not much of a problem.

Editor’s Note: Obama Donor Banned This Message (Shocking)

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved