According to this morning's press release from the Bureau of Economic Analysis (BEA), in September the overall U.S. trade deficit in goods and services rose to $36.5 billion per month, up from $30.8 billion per month in August. The trade deficit sums the aggregate demand that is escaping our economic tire while our government tries to pump it up through stimulus programs.
The bulk of our rising monthly trade deficit is our goods trade deficit with China which rose to $22.1 billion in September from $20.2 billion in August, after a slight decline the previous month, as shown below:
The continuing leakage of American aggregate demand to China is contributing to the constant decline in US manufacturing employment, as shown below:
Meanwhile, even though the US economy is experiencing occasional GDP blips upward when government spending spikes, the underlying pressure is downward from falling non-residential fixed investment, including manufacturing investment, as shown by the quarterly data below:
China is growing by at least 7% per year through a strategy of subsidizing exports, manipulating exchange rates, maintaining barriers to imports, and stimulating demand for Chinese produced goods only.
Meanwhile, the United States may be failing to recover from the Great Recession because of our failure to patch the trade deficits. If we were to trade our economic advisors for China's economic advisors, we would quickly get out of the recession.
Disclosure: No Positions
