Thanks to Yahoo Finance columnist Rick Newman for alerting me to the Commerce Department’s new report on the exports of individual states and how many jobs they’re “supporting” (a highly plastic term if ever there was). Within the next 24 hours, Yahoo Finance will probably post a piece by Rick presenting some of my views on the subject. He can’t possibly include all the points I made – but what are blogs for, anyway?
As was totally predictable, the Commerce study continues a proud, multi-presidency Executive Branch tradition of trying to mislead the press and public in two crucial ways. If you assume that this material is intended to spotlight the role played by international trade in U.S. growth and hiring (does anyone seriously doubt this?), then you have to agree that such exercises need to look at imports, and the trade balance, as well. So I wasn’t at all surprised to find that, as with its predecessors, the word “import” never appears in the report
It’s easy to understand why. Since the economic recovery began in the second quarter of 2009), the real U.S. trade deficit is up from $366.3 billion on an annualized basis to $463.5 billion (26.54 percent). Because rising deficits (a growing excess of imports over exports) subtract from growth, this means that trade flows have reduced the inflation-adjusted expansion of the gross domestic product by 5.93 percent. And virtually all of that toll has been exacted from the private sector (since government doesn’t trade much except some military gear). So U.S. trade has slowed the already feeble recovery, and in the section of the economy where it’s least affordable. And if trade has slowed growth, then obviously it’s slowed job creation.
Just as the whole economy doesn’t participate in international trade only by exporting, the individual states import, too. State import data is actually kept by the same Commerce Department agency that issued this new report. And it’s kept in a pretty detailed form. But Commerce omitted all of this state-level import data, and all that it reveals about the growing trade deficits that most states, mathematically need to run.
An analysis of international trade that leaves out imports is like a balance sheet that leaves out debits. It’s a wild exaggeration to predict that this Commerce report will worsen the public’s mistrust of its government and leaders. But that’s only because so few Americans will ever learn about it.