The Commerce Department reported the deficit on international tradein goods and services was $46.3 billion in January, up from $40.2 billion in December and $27 billion in mid 2009, when the recovery began. Deficits on oil and with China jumped $1.2 and $2.6 billion, respectively, and the overall trade deficit is blocking the creation of 3 million jobs each year.
This rising deficit subtracts from demand for U.S. goods and services, just as stimulus spending and additional temporary tax cuts add to it. Consequently, a rising deficit slows economic recovery and jobs creation, and the Obama Administration and Republican leadership in Congress have offered little to address it.
Rising oil prices and imports from China are driving the trade deficit, and these are major barriers to creating enough jobs to pull unemployment down to 6 percent over the next several years.
The economy added 192,000 jobs in February, and that was encouraging, after it gained only 63,000 in January; however, that is hardly enough. The economy must add 360,000 jobs per month over the next 36 months to bring unemployment down to 6 percent.
Americans have returned to the malls and new car showrooms but too many dollars go abroad to purchase imports and do not return to buy U.S. exports. This leaves too many Americans jobless and wages stagnant, and state and municipal governments with chronic budget woes.
Simply, current policies are not creating conditions for 5 percent GDP growth that could be achieved to bring unemployment down to acceptable levels. An additional 2 to 2.5 percentage points in growth would create about 3 million jobs a year.