Mar 9, 2007

Trade Deficit Deceit

Back in November I predicted in an article titled $29,852 that the average American would spend $7463 (each) on foreign made products. I was wrong, the actual number was $7289 or a 2.3% difference.

The deceit comes into the politically correct term “trade deficit”. Why politically correct? Because it fails to illustrate the full extent of the problem while softening the impression that that there is even a problem. Numerous economists have stated that the trade deficit is meaningless, just look at today’s unemployment rate, the nation is at full employment and we have had a deficit for 30 years.

Let’s look at unemployment and wages. Unemployment is very low but the entire credit for positive job creation, since 2001, could be attributed to the medical field. From my article back in November
Jacob Weisberg was on Lou Dobbs:

“At this time, with unemployment at 4.4%, the economy appears to be strong, but the truth is there are less people working today, as a percentage, than there has been since in 1991. In the last five years the medical field has added 1.7 million positions, the private sector has netted out at 0 new jobs.”

Factor in the gains from the lower wage service sector, and all the other sectors combined, were negative. Wages have shown some rebound in the last few months but with substantial losses in the higher wage manufacturing sector, wages in constant dollars, are lower than 1973. With medical coverage costs increasing at three times the rate of inflation, wages are squeezed even further.

The effects of our trade deficit is not standing up and shouting; Here I am. But the effects are real and unfortunately, will become more easily identifiable if/when the economy turns.


Rohan said...


Great site. I was wondering if you would be willing to participate in blog exchange (putting each other on our links/blogrolls) with my bipartisan political commentary site