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More on the Trade Deficit 

Trade Deficit Still Going Wrong Way - Even Faster
By Mike Crane

Three months ago in the heat of campaign rhetoric, the Trade Deficit actually decreased for the month of September (see: US Trade Deficit - Bragging about failure). Lets quickly review those numbers:

While the entire lot of new age rocket scientists called - "economists" - were pointing out the good news, we were much more reserved. Yes, the trade deficit went down for a month, but even this reduced rate was on track for another record breaking year. Further - after analyzing factors which generate the trade deficit, things did not look good. In the face of the Campaign rhetoric, the pundits were claiming that the tide had turned, our feeble little fledgling effort was severely criticized for not spreading the good word.

We sincerely wish that the political pundits had been correct, and that we were wrong. But sadly, our prediction then and now of a Trade Deficit in excess of $600,000,000,000.00 is going to be proven right.

Adding the just released trade information for November (see: Department of Commerce Press Release below and previous releases at: http://www.bea.gov/bea/newsrelarchive/relsarchive2004.htm) the above chart now looks like:

Using the government's own numbers we now have a year-to-date Trade Deficit of $552,300,000,000.00. We have already set the new all time record for Trade Deficits and still have one month to go for the annual statistics. In the last 23 months our country has sustained OVER 1 trillion dollars - $1,000,000,000,000.00 of Trade Deficits.

What does this mean?

To put the answer in perspective, take a look at the chart on the right. This is a graph of our Trade Deficits from 1959 through 2003. You can visualize what this revised chart will look like when the 2004 Trade Deficit is added. There will be another long downward segment added.

What this means is that our country is on a trend that can not be continued indefinitely. This should be obvious. So what these rapidly increasing Trade Deficits mean is:

Our country's economic policy is failing. It is not working.

The mushrooming and ever increasing trade deficit is just a symptom of forthcoming economic problems. At some point the trend has to reverse.

At some point we have to increase exports and decrease imports to decrease the Trade Deficit.

How are we going to increase exports and decrease imports when our government has established an economic policy that encourages companies to move factories to foreign countries? To outsource American jobs to foreign countries. To make investments in foreign countries.

• Every time an American factory closes and moves to a foreign country, we lose exports (and jobs) and we now have to buy those products from a foreign country. That increases imports.
• Every time an American company outsources jobs to India, China or where ever, it decrease services exports and increases services imports.
• Every time an American company invests money in a new foreign facility, it creates new imports and eliminates potential exports.

The Bush Administration tells us that this is "good for us." If you believe ever increasing Trade Deficits are "good for us," then you are wasting your time reading this web site, you should be reading material more in line with your views, click here.

Until these policies are changed, what is going to change the direction of the Trade Deficit?

Sadly the answer is - nothing.

The Trade Deficit will continue to increase or remain at unsound levels and your dollars will continue to be devalued. This is in effect a hidden tax resulting from unsound and failing economic policies. The Trade Deficit will continue to get worse, until foreign sellers loose their faith in the US economy. Then we will not be able to buy the products we no longer make or will have to pay excessive prices, at least those who have jobs will.

We hope that every American citizen will begin to give this problem some thought.

It is not the most interesting subject, but it may be one that is critical to your future well being. The policies causing the ever increasing Trade Deficit will not change until, you - the American citizens - demand that they be changed.

Otherwise we are looking at a Trade Deficit of around $650,000,000,000.00 next year, if not worse.

Why do we say "if not worse?" We were getting ready to post an article on our country's trade situation on agriculture products when the November Trade Deficit information was released. But do not worry, the Bush Administration will say it is "good for us." If you want to sure you get the Agriculture report you can be notified by email, click here.

The latest Press Release from the Commerce Department follows:

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