Sheila McKinney

Wednesday, June 15, 2011

CUTTING THE TRADE GAP WOULD CREATE JOBS

The Commerce Department reported the April deficit on international
trade in goods and services increased to $43.7 billion up from
$27.1 billion when the economic recovery began.

The trade deficit, along with the credit and housing bubbles,
were the principal causes of the Great Recession which is still
ongoing. A rising trade deficit again threatens to sink the
recovery and push unemployment above 10 percent.

U.S. economic growth and jobs creation has slowed, because the
demand for U.S. made goods and services is expanding too slowly.
Supplying what Americans and global consumers buy is not the
issue, but rather U.S. and export customers don't want enough
of what Americans could make.

At 3.5 percent of GDP, the trade deficit deficit subtracts more
from the demand for U.S. made goods and services than President
Obama's stimulus package added. Albeit the stimulus package
was temporary and the trade deficit is permanent and swollen.

The high cost of imported oil and gasoline and subsidized
manufactures from China account for nearly the entire deficit.
During the recovery, both the cost of imported oil and Chinese
imports have risen with consumer spending, and now these threaten
to sink the recovery by year end.

Money spent on Middle East oil and Chines coffee-makers and others
cannot be spent on U.S. made goods and services, unless offset
by exports.

When imports substantially exceed exports, Americans must consume
much more than the incomes they earn producing goods and services
or the demand for what they make is inadeuate to clear the shelves,
inventories pile up, layoffs result and the economy goes into a
recession.

According to the Commerce Department estimates, cutting the trade
deficit in half over three years would increase U.S. GDP by about
$500 billion dollars and create up to 5 milllion additional jobs.
This would increase growth the 3.6% from the expected 2.5% and
lower the unemployment rate by THREE PERCENTAGE POINTS!!!!