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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 $51.8 billion in March. This was up from $45.4 billion in February, thanks to weakening conditions in Europe and chronic deficits with China and in petroleum.

The $620 billion annual deficit is the most significant barrier to economic recovery and creating jobs, and consumer goods from China and oil account for virtually the entire problem.

Economists agree the pace of economic recovery has been too slow, because of too little demand for what Americans make.

Consumers are spending again, the process of winding down household debt that followed the Great Recession; however, too many consumer dollars go abroad to purchase Middle East oil and Chinese consumer goods but do not return to buy U.S. exports. Consequently, businesses can’t justify expanding U.S. facilities and hiring workers.

Since the economic recovery began in June 2009, the trade deficit has doubled and GDP growth has averaged a disappointing 2.4% a year. Unemployment has fallen from above 10% to 8.1% mostly because Americans have quit looking for work, not found jobs. 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:

Thursday, the U.S. Commerce Department is expected to report the deficit on international trade in goods and services was $51.7 billion in February, down just slightly from January.

The $620 billion annual trade gap is the most significant barrier to more robust growth and jobs creation, and oil and subsidized imports from China are the culprits.

Jobs Creation

In March, the economy added 120,000 jobs, but 362,000 jobs must be created each month for three years to lower unemployment to 6%.

Unemployment is down to 8.2% from 10% in October 2009, largely because working-aged adults are dropping out of the labor market–they are neither employed, nor seeking work. 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 is expected to report on Friday that the deficit on international trade in goods and services was $43.4 billion in October, up slightly from $43.1 billion in September.

This trade deficit is the most significant barrier to jobs creation and growth in the U.S. economy–even more formidable than the federal budget deficit, because its effects are more enduring.

Economic recovery is slow because the U.S. economy suffers from too little demand for what Americans make. Americans are spending again; the process of winding down consumer debt that followed the Great Recession ended in April. However, every dollar that goes abroad to purchase oil or Chinese consumer goods, and does not return to purchase U.S. exports, is lost domestic demand that could be creating American jobs.

Jobs Creation

Oil and Chinese imports account for virtually the entire trade gap. The failures of the Bush and Obama administrations to develop abundant domestic oil and gas resources and address subsidized Chinese imports are major barriers to reducing unemployment.

The economy added only 120,000 jobs in November, whereas 369,000 jobs must be added each month for the next 36 months to bring unemployment down to 6%. With federal and state government cutting payrolls, the private sector must add about 400,000 jobs a month to accomplish this goal. 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:

Friday, forecasters expect the U.S. Labor Department to report the economy added only 120,000 jobs in November, after scoring a nonplus 80,000 gain in October. The three-month moving average stands at 120,000 jobs, a pace inadequate to much lower unemployment.

The unemployment rate is expected to stay at 9.0%, mainly because so many displaced professionals report themselves as “self-employed,” when working only a few hours a week from home.

Even before escalating troubles in Europe and China are considered, the economic outlook is mediocre, with gross domestic product growth expected at about 2%–hardly enough jobs to absorb adult population growth. With Italy likely to default in a manner similar to Greece, and new questions raised about China’s accounting practices, fraudulent stock and bank reports, and inflation and growth statistics, all risks are to the downside.

Without more assertive efforts to address America’s structural problems–huge trade deficits with China and on oil, and ineffective and expensive regulations in banking and health care, America is headed for a protracted period of high youth unemployment and permanent displacement of many older workers. These conditions are not destiny–solutions are at hand but leadership and a genuine willingness to compromise, absent excessive partisanship, are required to progress. 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:

Occupy Wall Street may be out of Zuccotti Park but Americans ignore its message only at their peril.

Dispossessed by police from prominent venues around the country, the forces that inspired mass, albeit unseemly demonstrations have not abated. America is rapidly fracturing into two nations–affluent players in the global economy and a growing mass facing diminished circumstances for themselves and their children.

If forces marginalizing millions are not addressed, America is headed for much worse than tent cities and baths in parks. Economic bifurcation into the super affluent and the poor will erode the institutions and values that bound together immigrants from many heritages, faiths and tongues into a single nation.

The Census Bureau reports about 100 million Americans–one in three–live in or perilously close to poverty. Many are working but rely on food stamps, government agencies and charity to feed, clothe and provide medical care to their children. Most have too few resources to see a dentist regularly or even subscribe to a daily newspaper. They rely on cars, often because decent housing is much too costly near their work, and are forced to live too inconveniently from grocery stores, other services and multiple jobs to practically rely on public transportation. 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 China currency bill is the most significant jobs bill Congress could pass. It enjoys the bipartisan support of nearly 80 Republican and Democratic senators, yet President Obama and Speaker Boehner oppose it, illustrating both are out of touch with the problems besetting the American economy.

The nearly $600 billion trade deficit is destroying more American jobs than the mortgage crisis, too much business regulation, and high health-care costs combined.

Americans haven’t forgotten how to make things or compete. Unlike what President Obama would have us believe, Americans are not undereducated dolts, unenlightened in the ways of global competition. Rather, through a failure to act on issues the president has identified–Chinese mercantilism–and on issues where his ideology prevents action–the development of abundant U.S. energy–Americans are being denied their fair opportunity to compete.

Simply, the U.S. economy suffers from too little demand for what Americans make. Americans are spending again, but since the first quarter of 2009, the trade deficit is up 55%. In the second quarter, it was nearly $600 billion, or 4% of GDP–thanks almost entirely to surging imports of subsidized imports from China, barriers to U.S. exports into the Middle Kingdom and higher oil prices. 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:

Friday forecasters expect the U.S. Labor Department to report the economy added only 65,000 jobs in September–my estimate is 80,000. Either would be much less than the 130,000 needed for the economy to stay even with adult population growth.

Overall, gross domestic product and employment are growing more slowly than the adult population, and the private sector is much smaller than before the Great Recession–even with big boosts in federal subsidies for private health care and federal mandates for large health care spending by the states.

Employment grew in the second and third quarters despite very slow GDP growth, because labor productivity fell the first half of 2011. Consequently, real wages, per capita income and living standards are dropping, all exacerbated by hungry state and local tax collectors who refuse to tighten belts as quickly as households and businesses.

A downsizing private sector, falling productivity per capita GDP, and a shrinking share of the adult population employed or even seeking employment are ominous signs of economic decline.

Near term, employment in health care, retail and manufacturing should post modest gains, and construction should exhibit some bounce because it fell to such low levels during the recent recession. 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:

No economic policy could better serve Americans than genuine free trade but open trade policies are failing Americans.

The basic idea is compelling. Let each nation do more of what it does best, and specialization will raise productivity and incomes.

Americans are not sharing in those benefits because President Barack Obama, like President George W. Bush, permits China and others to cheat on the rules, unchallenged and to the detriment of the U.S. interests he was elected to champion.

The World Trade Organization has greatly reduced tariffs, prohibits virtually all export subsidies, and regulates other national policies that could subvert trade, such as health and product safety standards arbitrarily slanted to favor domestic suppliers.

For these rules to optimize trade, raise productivity and boost incomes, exchange rates must adjust to reasonably reflect production costs. To buy Chinese televisions, Americans must be able to purchase yuan with dollars; however, an artificially strong dollar that overprices U.S. tractors and software in China unravels the benefits of trade by denying Americans opportunities to export to pay for those televisions.

Exchange rates are established in currency markets, created by businesses trading through major financial institutions. Unfortunately, China and several other Asian governments blatantly manipulate those markets without a credible U.S. response and with ruinous consequences for the U.S. economy and American workers. 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:

Stocks are dropping like stones tossed into a summer lake, and the economy dances along the precipice of a second recession.

The U.S. economy is imploding thanks to incompetence in Washington and arrogance on Wall Street. President Obama is hardly the victim of his predecessor’s mistakes as much as his own decisions.

The Great Recession was caused by an imbalance of demand between the United States and Western Europe, on the one hand, and China and other Asian economies, on the other. The latter maintain rigged and undervalued currencies–essentially, they restrict conversion of their currencies into dollars and regularly purchase U.S. dollars to keep their currencies and exports cheap in Western markets. They also impose all manner of high tariffs and restrictions on Western exports into their markets.

During the Bush years, the U.S. trade deficit more than doubled to 5% of GDP, thanks to growing imports from China and expensive oil. When dollars earned by producing goods in the United States go abroad to purchase imports but do not return to purchase exports, either inventories build and layoffs result, or Americans must consume more than they produce. 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:

Seeking to boost housing and jumpstart the flagging economy, the Federal Reserve will push down mortgage rates a bit by purchasing $400 billion in long term Treasury securities.

Operation Twist will likely raise short rates even as it lowers long rates, because the Fed will sell Treasurys with maturities of less than three years to purchase an equal amount of Treasurys with maturities from six to 30 years. Those purchases will be undertaken gradually and completed by the end June 2012

Lowering mortgage rates a bit may help, but it won’t have the salutary effect on home purchases needed to raise real-estate prices and get consumers, whose balance sheets remain weak and have lost confidence in President Obama and Congress, to start spending again. Continue reading…