Post Misses Opportunity to Ridicule Obama Administration on Trade Data
|Saturday, 09 February 2013 09:29|
The trade deficit has been rising throughout the recovery. For arithmetic fans this is bad news. It means that the United States has net negative savings. That in turn means that either the government must run deficits or the private sector must have negative savings. There is no way around that fact, which means that people unhappy with the budget deficit should be unhappy about the direction of trade.
The December data showed a sharp drop in the trade deficit for the month. This was hailed by the Obama administration as good news, showing the success of its trade policy. It also touted the fact that exports hit a record level in 2012, as did the export share of GDP. The Post dutifully reported these Obama administration boasts.
It would have been helpful to provide readers with a bit of background. The $10.1 billion drop in the trade deficit reported for December followed a $6.5 billion rise in November. Trade data are highly erratic, with large changes in one month often followed by sharp changes in the opposite direction the next month. For example, the deficit reportedly fell by $7.7 billion last February but then rose by $7.2 billion in March. The average trade deficit for the last three months is actually $1.5 billion higher than for the prior three months, indicating that the deficit has been moving in the wrong direction.
While it is true that we set a record for exports last year, we set records for exports most years. The economy generally grows and the trade share generally grows as well. We also set a record for imports in 2012. Boasting about record exports is not very different than boasting about the sun rising. As far as the export share, the "record" of 13.90 percent compares to 13.89 percent in 2011.
This piece refers to the "free trade" agreement with South Korea. While it was called this by the administration, since many aspects of the deal had nothing to do with free trade and some actually involved increased protection (i.e. patents and copyrights), it would more accurately be described as simply a "trade" agreement. This step towards increased accuracy also saves space.