Reposted from the blog of Peter Morici
Trade Deficit Lowers GDP Growth
Peter Morici | January 13, 2013
Friday, the Commerce Department reported the trade deficit jumped dramatically in November, even with an easing of oil imports. At $48.7 billion, this was substantially higher than the consensus forecast of $41.1 billion.
This huge gap is the mirror image of weak demand for U.S.-made goods, and the most significant reason GDP is slogging along at well less than 2 percent the fourth quarter of 2012 and first quarter of 2013.
I have lowered my estimates of growth for Q4:12 and Q1:13 to 1 percent.
This disappointing data indicates U.S. competitiveness vis-à-vis Asian competitors is rapidly deteriorating despite strong U.S. productivity growth and innovation. It reflects foreign government policies—such as currency manipulation—and Washington inaction.
To be bi-partisan, both Speaker Boehner and President Obama appear little interested in strong actions to address these issues. Consequently, jobs seekers will continue to face tough challenges, and real wages will continue to stagnant or decline.