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U.S. Trade Deficit up in February
Howard Richman, 4/13/2010

This morning, the Bureau of Economics Analysis released their preliminary trade statistics for February. Imports jumped by $2.7 billion while exports creaped up by $0.3 billion. Whenever U.S. demand begins to grow, the trade deficit rises, letting demand out, and slowing the recovery.

Our trade numbers with China do not show any progress. Although down since January 2010, the deficit was up since February 2009. Also, Chinese imports from the United States were down slightly in February 2010, as compared to January 2010. There is no evidence, here, that the Chinese government is taking down its many tariff and non-tariff barriers to U.S. products.

Earlier this week (Trade Deficit Burdens Economic Recovery). University of Maryland economist Peter Morici calculated just how much the growing trade deficit was holding down U.S. growth. He wrote:

In 2010, the trade deficit with China is reducing U.S. GDP by more than $400 billion or nearly three percent. Unemployment would be falling rapidly and the U.S. economy recovering more rapidly but for the trade deficit with China and Beijing’s currency policies.

Longer term, China’s currency policies reduce U.S. growth by one percentage point a year. The U.S. economy would likely be $1 trillion larger today, but for the trade deficits with China over the last 10 years.

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Comment by Howard Richman, 4/14/2010:

I just revamped the comment posting program on this website so that I would not inadvertently delete future comments when I revise a posting. However, I created a new problem. It will no longer be possible to post comments to postings older than this one.




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  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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