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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

U.S. exports up, but higher imports widen trade deficit

By Howard Schneider
U.S. exports jumped more than 2 percent in May. But a surge in imports widened the country's trade deficit -- disappointing the effort to even out global trade flows.

The latest U.S. trade figures showed American businesses sold $152.3 billion of goods and services overseas in May, $3.5 billion more than in April.

Imports increased 2.9 percent to $194.5 billion.

The Obama administration is pushing to boost exports as a way to create jobs, and the increase was welcome news after a disappointing decline in April.

The overall widening of the country's trade deficit, however, showed how difficult it will be to rebalance the global economy so that the United States does not consume far more than it produces.

The U.S. trade deficit expanded in May to its highest level in 18 months, rising 4.8 percent to $42.3 billion, the U.S. Commerce Department reported Tuesday.

The monthly trade deficit with China alone jumped $3 billion, to $22 billion, a figure that manufacturing groups said showed that a focus on exports alone was insufficient.

The deficit represents "wealth and jobs heading overseas," said Scott Paul, executive director of the Alliance for American Manufacturing.

The trade deficit also represents a drag on overall economic growth at a time when the Federal Reserve and other analysts worry that the country's economic recovery is slowing.

By Howard Schneider  |  July 13, 2010; 10:09 AM ET
Categories:  Deficit/debt , Fed Reserve  
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Comments

Part of our economic dilemma comes from the admission of China into WTO. Their ability to manipulate their currency and pay their workers very low wages results in extremely low import prices. These permit high profit margins for sellers in the US but seriously increase our unemployment.

Similarly, instantaneous worldwide communication allows companies to employ workers in India at low dollar wages to do telephonic sales of services involving money - like mortgage refinancing, credit card sales, etc.

The free market is currently working against the US economy.

Our economy was built on exports. In the mid 1800's the US treasurer recommended increasing the use of selective tariffs to limit imports to raw materials needed to manufacture goods. And it worked until the Civil War.

What we have to do now is restrict imports through selective tariffs. We already have anti-dumping laws. We must expand that concept to make imported goods more expensive so that domestic manufacturing will pick up.

Another thing that's needed is R&D to develop technologies - like in the field of health care that are superior to that in other countries so that our healthcare services will be purchased abroad. This may be more difficult to accomplish.

The third thing is to develop green technology so advanced that other countries will buy it from us. Of course, the Chinese, Japanese, and Indians will try to copy our technology and make it available cheaper, so we have to constantly think ahead (like Steve Jobs does with Apple) and become the recognized world leader in this field.

And to keep capital from flowing to our international competitors we should tax foreign investments.

If we let the free market continue uncontrolled, this country's economy will lag China's in another two decades and the standard of living of our lower classes will drop seriously.

But forcing millions to ride bikes instead of cars should improve their health so things will not all be bad.

Posted by: loyalsyst | July 13, 2010 11:29 AM | Report abuse

Until tariffs are re-enacted, we will have this continual decline in our country, but tariffs will never happen as the anti-American globalists would rather destroy America than lose their "faith-based" "free trade".

They have sold our American birthright for a bowl of soup, and the day of reckoning is here. If you do not support tariffs, you do not love your country.

It's really that plain and simple.

Posted by: santafe2 | July 13, 2010 11:47 AM | Report abuse

What are we seeing in May? First. Richest are spending more on luxury with high intrinsic value. Second. Lower prices for bussiness survival are convincing some other people also to spend. A clear sign on inflation was a good sign to suggest such trend of growwth. Alternatively it was important to know how much units of goods have been traded.

Posted by: Vercinget333 | July 13, 2010 1:24 PM | Report abuse

Why are Japan, China, and India able to make things cheaper than we can. Japanese workers are better paid. China's workers workers under Mao were once considered one of the world's worse. India has many good workers - some of the world's best but no infrastructure.
What do all three of these nations have in common - a better school system and a diet better geared for learning. Improve the schools - improve the diet - improve the worker - improve productivity - improve the standard of living.
Solution - legislate more omega-3 in the diet (copy Japan on this one). More school days K-12 - Korea is the world leader, smaller classes (Finland is the leader) copy Germany's apprenticeship programs to get the heavy industrial tools industry back in America.

Posted by: agapn9 | July 13, 2010 3:02 PM | Report abuse

China is Undercutting the USA all around the world. We have Subsidized and Sacrificed enough Jobs to help China Job growth. Now it's time to play fair and Do more than just Talk about China's Currency Manipulation that is costing the USA millions of Jobs. Actions speak louder than words. The USA must Immediately enact a gradual tariff on all goods imported from China up to 40% within 12 months in response to their currency manipulation that keeps the Yuan/Renminbi 40% below value. Ratify the free trade agreement with South Korea which will allow fairer trade than what we have with China.

S. 1254: Currency Exchange Rate Oversight Reform Act of 2009: A bill to identify foreign currency manipulation and apply tariffs to their imported good as is fair to the US consumer:

http://www.govtrack.us/congress/bill.xpd?bill=s111-1254

http://www.opencongress.org/bill/111-s1254/show

USA Mega-Banks are not lending to USA businesses, they are hoarding money, Investing Overseas, and using it to place bets on Derivatives, Swaps, CDO’s Etc. The USA needs a National Clean Energy Deployment Bank to lend to emerging industries that are proven to create USA Jobs while addressing our most pressing needs; Job Creation, Manufacturing Products, Energy Independence, and Economic Security.

See: A rail corridor along I-81 that would get traffic and the economy moving again
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032502404.html

“The Crescent Corridor project would return $25 in economic and environmental benefits for every dollar invested.” “The Crescent Corridor, a 2,500-mile rail route stretching across 13 states from New Jersey to Tennessee and Louisiana, would offer significant economic and environmental benefits by creating tens of thousands of jobs and moving trucks off crowded highways such as I-81.”

Invest in Freight Rail (such as the I81 corridor) and USA made Efficient Locomotives to use less Oil. 70% of our Oil use is in Transportation. Expanding Freight Rail along I81 can remove Thousands of Trucks, save Billions of Barrels of Oil, and Create Tens of Thousands of Jobs.

Posted by: Airborne82 | July 13, 2010 4:29 PM | Report abuse

China’s currency manipulation and other Policies Cheat the USA in several areas:

http://www.huffingtonpost.com/dave-johnson/chinese-currency-manipula_b_518951.html

1) Currency manipulation. China "pegs" its currency at a very low, or "weak" rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.

This costs USA Industry Millions of Jobs. Not the Walmart and dollar store product Jobs, but the big industrial multi-million dollar steel, carbon fiber and technology products.

The USA must Immediately enact a gradual tariff on all goods imported from China up to 40% within 12 months in response to their currency manipulation that keeps the Yuan/Renminbi 40% below value. Ratify the free trade agreement with South Korea which will allow fairer trade than what we have with China.

Administration declines to cite China on currency:
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/08/AR2010070804637.html

“Lawmakers on Capitol Hill criticized the findings. Some vowed to push legislation to impose stiff penalties on Chinese imports if China does not move more quickly to revalue its currency. Sen. Charles Schumer, D-N.Y., one of China's leading critics in Congress, said he plans to seek a vote on his legislation at the earliest opportunity.”

“American manufacturers say the Chinese currency is undervalued by as much as 40 percent. They contend that this undervaluation is a key reason for America's huge trade deficit with China, the largest with any country. It is also a factor in the loss of millions of American manufacturing jobs over the past decade, they say.”

S. 1254: Currency Exchange Rate Oversight Reform Act of 2009: A bill to identify foreign currency manipulation and apply tariffs to their imported good as is fair to the US consumer:

http://www.govtrack.us/congress/bill.xpd?bill=s111-1254

http://www.opencongress.org/bill/111-s1254/show

Posted by: Airborne82 | July 13, 2010 5:07 PM | Report abuse

Oil is not cheap for those who have to die so others can profit and waste it. Tax it and fund Job creation; Rebuild and Expand USA Road and Rail Infrastructure, and Oil replacement vehicles and technologies. Target tax breaks towards USA Industries that create the greatest amount of USA Job growth.

Tax both Domestic and Imported Gasoline a Modest $.50/Gallon. A Modest $.50 cents a gallon to put Millions of Americans back to work and Maintain, Rebuilt and Expand the USAs Road and Rail Infrastructure, and create energy efficient vehicles and investment while putting a greater emphasis on Conservation and Efficiency to Use Less Oil and make what we use go Further and Last Longer.

The benefits to the USA are tremendous and far outweigh cheap Oil to waste and pollute just because it's cheap. Save it, conserve it, use it wisely, and leverage it to create Jobs and Energy Independence. A modest tax on Gasoline to fund USA Jobs and Infrastructure is a lot easier than sacrificing an Arm, Leg, Eye, or Life as thousands of our military men and women have and continue to do.

Posted by: Airborne82 | July 13, 2010 5:17 PM | Report abuse

Reason for the overall deficit is the trade deficit with Mao Tse Tung successors govt of Communist Red China, due to a pegged currency exchange rate which favors MTTCRChina exports. This has caused trillions (not billions) of dollars in unspent deficit cash sitting in MTTCRChina, uprooted countless companies in America and other countries. Also, their hawkeye look at companies like Google, Godaddy and other American companies have caused them to exit MTTCRChina (got kicked out). Hence, US companies donot benefit from the MTTCRChina business. Resultant layoffs caused recession is heading towards a depression in USA and worldwide. If a nation (MTTCRChina) refuses to engage in free trade, its free trading privileges should be hit with the delete button.

Posted by: vk1537 | July 14, 2010 2:16 AM | Report abuse

Reason for the overall deficit is the trade deficit with Mao Tse Tung successors govt of Communist Red China, due to a pegged currency exchange rate which favors MTTCRChina exports. This has caused trillions (not billions) of dollars in unspent deficit cash sitting in MTTCRChina, uprooted countless companies in America and other countries. Also, their hawkeye look at companies like Google, Godaddy and other American companies have caused them to exit MTTCRChina (got kicked out). Hence, US companies donot benefit from the MTTCRChina business. Resultant layoffs caused recession is heading towards a depression in USA and worldwide. If a nation (MTTCRChina) refuses to engage in free trade, its free trading privileges should be hit with the delete button.

Posted by: vk1537 | July 14, 2010 2:17 AM | Report abuse

I agree with Airborne82. Here is another reason. Thanks to Tibet, China is today the largest producer of GOLD in the world. Its production exceeds South Africa's. As we all know, in the last few years the price of Gold has quadrupled. China doesn't need the added benefit of a fraudently exchange rate artificially set low. Hit the delete button on free trade privileges of China promptly!

Posted by: vk1537 | July 15, 2010 1:35 AM | Report abuse

A former senior advisor to President Bill Clinton says that the only thing which can rescue Barack Obama’s increasingly tenuous grip on power as his approval figures continue to plunge is a terror attack on the scale of Oklahoma City or 9/11, another startling reminder that such events only ever serve to benefit those in authority.
Buried in a Financial Times article about Obama’s “growing credibility crisis” and fears on behalf of Democrats that they could lose not only the White House but also the Senate to Republicans, Robert Shapiro makes it clear that Obama is relying on an October surprise in the form of a terror attack to rescue his presidency.
“The bottom line here is that Americans don’t believe in President Obama’s leadership,” said Shapiro, adding, “He has to find some way between now and November of demonstrating that he is a leader who can command confidence and, short of a 9/11 event or an Oklahoma City bombing, I can’t think of how he could do that.”
Shapiro’s veiled warning should not be dismissed lightly. He was undersecretary of commerce for economic affairs dung Clinton’s tenure in the Oval Office and also acted as principal economic adviser to Clinton in his 1991-1992 campaign. Shapiro is now Director of the Globalization Initiative of NDN and also Chair of the Climate Task Force. He is a prominent globalist who has attended numerous Bilderberg Group meetings over the past decade.
Shapiro is clearly communicating the necessity for a terror attack to be launched in order to give Obama the opportunity to unite the country around his agenda in the name of fighting terrorists, just as President Bush did in the aftermath of 9/11 when his approval ratings shot up from around 50% to well above 80%. Full eye opening Article at: http://www.prisonplanet.com/top-clinton-official-only-a-terror-attack-can-save-obama.html
http://www.youtube.com/watch?v=x-CrNlilZho&feature=player_embedded

Posted by: PaulRevere4 | July 15, 2010 3:33 AM | Report abuse

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