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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The Commerce Department reported the deficit on international trade in goods and services was $48.2 billion in March, up from $45.4 billion in February. The deficit on oil surged $5.8 billion on higher prices and increased volumes.

This trade deficit subtracts from demand for U.S.-made goods and services, just as a large federal budget deficit adds to it. Consequently, a rising deficit slows economic recovery and jobs creation and limits how much Congress and the President may cut the deficit without sinking the economic recovery.

Rising oil prices and imports from China are driving the trade deficit up, and these are major barriers to creating enough jobs to pull unemployment down to acceptable levels over the next several years. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Analysts expect the Commerce Department to report on Wednesday the deficit on international trade in goods and services was $47.7 billion in March, up from $45.8 billion in February.

This trade deficit subtracts from demand for U.S.-made goods and services, just as a large federal budget deficit adds to it. Consequently, a rising deficit slows economic recovery and jobs creation and limits how much Congress and the President may cut the deficit without sinking the economic recovery.

Rising oil prices and imports from China are driving the trade deficit up, and these are major barriers to creating enough jobs to pull unemployment down to acceptable levels over the next several years.

Jobs Creation

The economy added 244,000 jobs in April; however, 360,000 jobs must be added per month to bring unemployment down to 6% over the next 36 months. With federal and state governments trimming civil servants, private-sector jobs growth must exceed 360,000 per month to accomplish this goal.

Americans have returned to the malls and new car showrooms but too many dollars go abroad to purchase Middle East oil and Chinese consumer goods that do not return to buy U.S. exports. This leaves too many Americans jobless and wages stagnant, and state and municipal governments with chronic budget woes.

Simply, policies regarding energy and trade with China are not creating conditions for the 5% GDP growth that is needed and easily could be achieved to bring unemployment down to acceptable levels.

In April, the private-sector added 268,000 jobs per month, but many were in government-subsidized health care and social services. Netting those out, core private-sector jobs have increased only 229,000 in April. That comes to 73 non-government-subsidized jobs per county for more than 5,000 job seekers per county.

Early in a recovery, temporary jobs appear first, but 22 months into the expansion, permanent, non-government-subsidized jobs creation should be much stronger.

Economic Growth

Since the recovery began in mid 2009, GDP growth has averaged 2.8%, disappointing administration economists who have consistently assumed 4% growth in budget projections and forecasts for the job-creating effects of stimulus spending.

Consumer spending, business technology and auto sales have added strongly to demand and growth, and exports have done quite well. However, soaring oil prices and the continued push of subsidized Chinese manufactures in U.S. markets have offset those positive trends.

Administration imposed regulatory limits on conventional oil and gas development are premised on false assumptions about the immediate potential of electric cars and alternative energy sources, such as solar panels and windmills. In combination, administration energy policies are pushing up the cost of driving and making the United States even more dependent on imported oil and indebted to China and other overseas creditors to pay for it.

To keep Chinese products artificially inexpensive on U.S. store shelves, Beijing undervalues the yuan by 40%. It accomplishes this by printing yuan and selling those for dollars and other currencies in foreign-exchange markets.

Presidents Bush and Obama have sought to alter Chinese policies through negotiations, but Beijing offers only token gestures and cultivates political support among U.S. multinationals producing in China and large banks seeking additional business in China.

The United States should impose a tax on dollar-yuan conversions in an amount equal to China’s currency market intervention divided by its exports–about 35%. That would neutralize China’s currency subsidies that steal U.S. factories and jobs. It is not protectionism; rather, in the face of virulent Chinese currency manipulation and mercantilism, it’s self defense.

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

In November, the Federal Reserve will likely launch a second round of quantitative easing but don’t expect “QE2″ to make big waves. The failure of the Group of 20 finance ministers’ talks permits China to continue to subvert Fed efforts to rekindle U.S. growth.

More Fed purchases of Treasury and mortgage-backed securities would drive down borrowing costs and, it is hoped, boost business investment and home purchases. However, big corporations are already flush with cash and mortgage rates are near record lows, and the potential benefits from additional monetary promiscuity are limited.

U.S. businesses lack customers, and even zero interest rates won’t inspire General Electric Co. (GE) to build factories and add workers if light bulb sales are stagnant. Without more jobs, prospective homebuyers are too nervous to quit renting or purchase bigger homes.

Moreover, China’s export-oriented development policies and undervalued yuan subvert the impact of U.S. monetary policy on the demand for U.S. products, and U.S. investment, hiring decisions and housing markets.

Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The Commerce Department reported the February deficit on international trade in goods and services increased to $39.7 billion from $37 billion in January. Chinese President Hu Jintao has told U.S. President Barack Obama that China will not revalue its currency in response to U.S. requests.

This leaves Obama with the difficult choice between acting unilaterally or appeasing Chinese mercantilism to the great detriment of U.S. businesses and workers.

Subsidized manufactured goods from China and petroleum account for nearly the entire deficit, and both will rise as consumer spending and oil prices rise through 2010.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Barack Obama is seeking to double U.S. exports and create 2 million jobs over the next five years. The new Commerce Department program to accomplish this goal is simply inadequate.

The Commerce Department initiative merely consists of redoubling existing efforts and not addressing the fundamental issues–the undervalued Chinese yuan and high tariffs, and other regulatory barriers that block U.S. exports in much of Asia.

Commerce Secretary Gary Locke is launching a program by increasing Export-Import Bank funding for small businesses from $4 billion to $6 billion; boosting Commerce Department personnel that assist exporters at U.S. embassies and consulates in China and India; and strengthening enforcement of trade laws and agreements. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

In politics, whatever the president can get voters to believe becomes the truth, but in economics the numbers establish the facts.

Unfortunately for President Barack Obama, Americans can add, and their sums are destroying fantasies the president would hoist upon a more gullible public.

Despite claims that the $787 billion stimulus package and bank bailout averted calamity, the U.S. economy is in shambles.

The Commerce Department reported gross domestic product grew 5.7% in the fourth quarter, but 60% of that was an accounting adjustment. Businesses ran down inventories at a slower pace, but in the arcane world of GDP accounting, that scores an increase in investment and growth.

Domestic consumption and real investment, which define the sustainable pace of economic expansion, contributed a paltry 1.8% to growth. That’s less than half of productivity growth, indicating more pink slips are coming.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Thursday, the Commerce Department will report July international trade in goods and services. The trade deficit, which is the amount that imports exceed exports, is expected to rise to $28 billion from $27 billion in June.

The trade deficit was a principal cause of the Great Recession and threatens to stifle recovery and push unemployment above 10% through 2011.

At 2.3% of GDP, the trade deficit subtracts more from the demand for U.S.-made goods and services than President Barack Obama’s stimulus package adds. Moreover, Obama’s stimulus is temporary, whereas the trade deficit is permanent.

Continue reading…