Election Day Brings the Biggest U.S. Manufacturing Trade Deficit EverBy
Tuesday’s trade deficit figures won’t give voters much confidence as they go to the polls for the U.S. midterm elections. The latest deficit in manufactured goods was the biggest ever, according to Alan Tonelson, a blogger who maintains a data series that the government itself doesn’t report.
The gap between imports and exports was $69.2 billion in September, and the gap for the year to date was $534.4 billion, according to figures released by the Bureau of Economic Analysis and the Census Bureau. For manufactured goods, the monthly deficit is the biggest ever, as is the year-to-date deficit, according to a calculation by Tonelson, who runs the independent RealityChek blog.
With the annual trade deficit running nearly 12 percent above last year’s record, “it looks like we’ll set two straight records unless something drastic happens” before 2014 ends, Tonelson says.
President Obama vowed in 2010 in his first State of the Union address to double overall U.S. exports in five years. After a good start, the U.S. is falling far short. In September, U.S. exports were a little over $135 billion, up only 38 percent from December 2009, the month preceding Obama’s speech.
Obama has taken a special interest in manufacturing, repeatedly visiting American factories that add to jobs and exports. As recently as Oct. 27, the President’s Council of Advisors on Science and Technology released a detailed set of recommendations (PDF) on how to boost manufacturing in the U.S.
As the latest numbers show, the reality is hard. One problem is that potential customers are in poor condition. Japan, Europe, and Latin America—all big markets for U.S. exports—are struggling. China’s growth has also slowed, curbing its appetite for U.S. imports. The U.S. trade deficit with China hit a record in September, Tonelson says.
The widening trade deficits reflect superior U.S. growth, which means that the U.S. “is likely to import more as well as produce more,” Harold Sirkin, a senior partner at the Boston Consulting Group, wrote in an e-mail. He added that the monthly data fluctuate, so “it’s too early to say whether this is a meaningful change.” The consulting firm argues that U.S. manufacturers will thrive as they become more competitive vs. China and other countries.
Neither the BEA nor the Census Bureau keeps a downloadable historical data series on manufacturing trade. Tonelson fills that unmet need by recording the monthly figures as they come in and doing the calculations himself.
The overall trade deficit, which includes services and non-manufactured goods, was the biggest in four months, as reported on Tuesday by Bloomberg. The trade deficit was worse than the government had assumed when it estimated that the U.S. economy grew at a 3.5 percent annual rate in the third quarter. Annual gross domestic product growth will probably be revised down to 3 percent because of the trade report and worse-than-expected construction spending data, Morgan Stanley economist Ted Wieseman told clients on Tuesday.