The economy expanded a tepid 1.3 percent in second quarter as consumer spending went flat, and imports drained off much of that domestic demand.
Higher oil prices, Wall Street contracting and local governments retrenching are killing growth. All on top of a huge trade deficit with China, which sends much of what is not spent on oil abroad to China — not enough of either comes back to buy exports and replace jobs lost to oil and Chinese electronics. Exports were up but without cracking the protected Chinese market — which is where the consumers are — U.S. chances to lower unemployment are nil.
Globalized economies must go with their strengths. For the United States those are resources, banking and medium and high-tech manufacturing and services.
Shutting down drilling makes the United States too dependent on foreign oil, when it could be energy-independent with oil selling for $100 a barrel.
Wall Street needs proper regulation but Sarbanes-Oxley and Dodd-Frank have not reined in trading nor redirected efforts toward honest lending. Too many business are dependent on volatile to crisis money markets for cash, because banks won't lend but instead trade.
Finally, China's exchange rate policy deprives U.S. of growth in mid-range and high end manufacturing.
If an economy doesn't go with its strengths, it can't create jobs in a globalized economy.
President Obama will blame his predecessors and House GOP and budget morass — and with the help of The New York Times may get away with it.
Peter Morici is a professor at the Smith School of Business, University of Maryland, and former Chief Economist at the U.S. International Trade Commission.email@example.com. 703 618 4338.
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