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Richmans' Trade and Taxes Blog
Obama administration is impoverishing the U.S. middle class
On Friday, the BEA reported its preliminary report of U.S. GDP during the first quarter of 2010. One thing that struck me, when looking at the statistics, is that the U.S. trade deficits are coming back strong. The following is the quarterly trade deficit (reported on an annualized basis):
I expect the trade deficit for the first quarter to be revised downward after the March data is reported, because of China's decision to buy lots of commodities that month, instead of running a trade surplus. But, I expect that the U.S. trade deficits will be $50 billion higher when the second quarter statistics are reported.
University of Maryland economist Peter Morici's take on the statisitics (This Recovery is Anti-Middle Class) is that the recovery from the recession is quite weak and that it won't benefit the U.S. middle class. He wrote:
The Commerce Department reported GDP grew a modest 3.2 percent in the first quarter, further confirming the end of the recession and that the recovery is only moderate and disappointing. Half of the growth came from inventory adjustments, and the prospects for future growth and wage gains are only modest....
Unemployment will hang above 8 or 9 percent well into 2011, and most workers will continue to face a tough job market and declining living standards.
Wages will not keep up with rising prices, health care premiums and taxes. A good deal of the gains, so far, are going to Wall Street and the medical and intellectual property industries.
At 3.2 percent, first quarter GDP growth was pumped up by an end to inventory draw down and some rebuild — in the arcane world of GDP accounting, ending depletion of inventories adds to growth. Although the inventory rebuild has begun, the pace is slow reflecting tepid sustainable demand for U.S. goods and services....
The growing trade deficit is caused by the Obama administration's inexplicable decision to allow China to continue its currency manipulations, letting China keep stealing U.S. manufacturing and R&D jobs. Thus, if Morici's predictions about the recovery are correct, the Obama administration's policies are impoverishing the American middle class.
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