Initial Claims for Unemployment Insurance and the Trade Deficit Both Increase
Mark Thoma at Maximum Utility has conclusions on the figures for creation of jobs and trend in trade deficits: (reposted with permission of the author)
Figures on the trade balance and new claims for unemployment insurance are out this morning, and the news isn’t as good as hoped. First, initial claims increased:
In the week ending March 5, the advance figure for seasonally adjusted initial claims was 397,000, an increase of 26,000 from the previous week’s revised figure of 371,000. The 4-week moving average was 392,250, an increase of 3,000 from the previous week’s revised average of 389,250.
This level of claims, around 400,000, is near the breakeven point between a job market that is creating jobs, and one where jobs are being lost. Thus, these figures, combined with the figures over the last several releases embedded in the four-week average show a job market that is struggling to provide enough jobs just to keep up with population growth, let alone recover the millions of jobs lost during the recession. The trend for claims is in the right direction, and more generally job markets do appear to be improving, but the improvement is frustratingly slow. We need the recovery to accelerate substantially if we are going to get back to full employment in a reasonable amount of time.
Second, the trade deficit increased to $46.3 billion in January, an increase of around $6 billion:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total January exports of $167.7 billion and imports of $214.1 billion resulted in a goods and services deficit of $46.3 billion, up from $40.3 billion in December, revised. January exports were $4.4 billion more than December exports of $163.3 billion. January imports were $10.5 billion more than December imports of $203.6 billion.
The jump in the trade deficit exceeded expectations, and was partly due to higher energy prices. In addition, the trade deficit with China increased by 12.5% to a little over $23 billion.
Some have pointed to increased exports and a reduction in the trade balance as one of the keys to recovery. A reduction in the deficit at the end of the last year provided some hope that this was happening, but this report throws cold water on those hopes. And, to make it worse, if energy prices go up any further the foreign sector is likely to pose a drag on an already much too slow recovery.
Twenty years of progress:
Globalization will be good for US workers. then
Globalization could be good for US workers. then
Globalization will be good for some US workers. then
Globalization will make a few people wildly rich and everyone else can shop at Wal-Mart.
We have a growing trade deficit with China. China reports a growing trade deficit. Europe must be rocking.
If they can’t afford Wal-Mart, they can try the Dollar stores. This was always Plan B.
Here is the full text release on international trade in goods and services.
Alan Tonelson delivers a blistering assessment of the trade deficit picture with considerable focus on China. He is more harsh than Peter Morici this month. Here it is:
U.S. Trade Deficit Soars, Led by China, Manufacturing, and High-Tech Goods
Thursday, March 10, 2011
WASHINGTON, D.C., March 10 – As Congress mulled a series of new trade deals, a jump in the January trade deficit provided new evidence Washington has not yet learned how to expand trade without ballooning the U.S. deficit – thereby worsening America’s already dangerously high levels of debt and further slowing an already sluggish recovery.
Said U.S. Business and Industry Council Research Fellow Alan Tonelson, “The January trade deficit surge, coming on top of a 32-plus percent rise in last year’s deficit, is telling Congress loudly and clearly to figure out how to do trade policy right before plunging ahead with new agreements.
Step One needs to be solving our trade crisis with a China that remains highly protectionist despite years of U.S. pleadings.”
Added Tonelson, “These trade numbers are sending an even louder message to the new Tea Party-oriented legislators who just endorsed passing the Korea, Colombia, and Panama trade deals. They can forget about repairing the nation’s broken finances if they want to resume speeding down a trade policy road that’s a proven debt creator.”
Spurring the deficit’s rise were dramatically higher U.S. trade gaps with China, and in the crucial manufacturing and high tech sectors. All dwarfed the increase in America’s oil trade deficit.
The soaring goods trade deficit with China was especially disturbing. The 12.52 percent increase, from $20.68 billion in December to $23.27 billion, was keyed by a huge 20.16 percent nosedive in U.S. goods exports to the rapidly growing Chinese economy – from $10.12 billion to $8.08 billion. U.S. goods imports from China rose, but only by 1.79 percent, from $30.80 billion to $31.35 billion.
Domestic manufacturing’s January trade performance was even worse. The deficit increased by 13.47 percent, from $49.38 billion to $56.03 billion. Industrial exports sank by 5.79 percent in January, from $117.01 billion to $110.24 billion, dealing a blow to President Obama’s goal of creating high-wage jobs by promoting U.S. overseas sales. Manufacturing imports remained virtually unchanged, dipping only from $166.39 billion to $166.27 billion.
But the most dismal January performance was recorded by America’s high tech goods deficit, which jumped by 29.26 percent, from $5.50 billion to $7.11 billion. High tech goods exports plunged by 18.94 percent, while high tech goods imports declined by a much lower 10.54 percent.
All these surging trade deficits dwarfed the 4.71 percent increase in the oil gap in January, from $25.46 billion in December to $26.66 billion. Indeed, the overall non-petroleum goods deficit skyrocketed by 18.55 percent in January.
The overall goods and services deficit rose 15.10 percent in January, from a downwardly revised figure of $40.26 billion to $46.34 billion. The overall goods deficit increased 11.41 percent and the much smaller services surplus inched up 0.30 percent.
Overall exports increased by 2.72 percent, from $163.30 billion to $167.74 billion. And goods exports increased by 3.42 percent, from $116.54 billion to $120.50 billion. But overall imports increased by 5.17 percent, from $203.56 billion to $214.08 billion. And goods imports soared by 5.94 percent, from $180.25 billion to $170.14 billion.
The rise in the China goods […]
The biggest surprise in recdent data was the weakness in real imports in late 2010 that caused net trade to actually add to real GDP in late 2010.
It looks like the import weakness was a fluke and that imports are now back on the sharply rising trend established in 2009 and early 2010.