Where I previously wrote that some things were getting worse more slowly, the trade deficit is just getting worse again.
The US Trade Deficit Widened in February by 7.4 percent over the previous month, to $39.7 billion. “Imports surged 1.7 percent for the month. Exports did not keep pace, climbing 0.2 percent in February.” The import surge even “outweighed the impact of oil imports falling to their lowest level in 11 years.” (Sources NY Times and WSJournal.)
The Alliance for American Manufacturing has a brief statement on their blog,
“The trade deficit figures show the urgent need to rebalance the American economy. Our bilateral trade deficit with China continues to be a crisis. U.S. exports to China actually dropped slightly in February. So much for China’s mythical progress on its efforts to eliminate mercantilist policies. The message that President Obama should deliver to China is clear: stop manipulating your currency, stop subsidizing your industries, and start opening your markets, or there will be consequences. America has already shed 2.4 million jobs as a result of the trade deficit to China, and the most recent trade numbers will only add to that toll.”
The choice is manufacture or borrow. And we can only borrow until we can’t.
Previous unsustainable conservative/Wall Street economics got us into a mess. Well that mess is only masked, not gone. Things might be starting to look OK for a while — especially in New York’s nice restaurants — because the government pumped trillions into the big banks, making them look solvent (for now). Meanwhile the Fed is still holding interests rates at near-zero. But just because things look a little bit like they did during the good times of the bubbles we shouldn’t think that means that just doing more of the same means it will continue to look OK. Some real changes are needed, or it is all just going to fall back in on itself.
Face it. We just have to stop borrowing from others to buy things. We just have to start manufacturing more of what we buy. We just have to insist that China and others trade fairly.