In its latest release, the Commerce Department tried to deflect attention away from the still growing trade deficit and China's continued dominance in that area by focusing on near-record exporting activity. And despite gains, the trade deficit grew another 5.9% to $40.6 billion. It's the highest tally in more than four months.
U.S. Commerce Secretary Gary Locke noted that U.S. exports of goods and services in December increased 1.8% from November to $163 billion. U.S. imports also accelerated, by 2.6 percent to $203.5 billion. That leaves the overall trade deficit growing at $40.6 billion.
Lock noted that following a 14.6% decline in 2009, "exports grew 16.6% in 2010, compared with an average annual rise of 11.2% during 2002-2008. Exports of goods and services in 2010 reached $1.83 trillion, the second highest annual total on record and the largest year-to-year percent change in over 20 years." In 2010, exports contributed to nearly half gross domestic product growth.
"U.S. exports showed strong growth in 2010, increasing 16.6% over 2009 levels, putting us on track to achieve President Obama's National Export Initiative goal of doubling exports by the end of 2014," he said. "Exports are leading the U.S. economic recovery and helping to create high-quality jobs for the American people."
NACM Economic Advisor Chris Kuehl noted that news of near record exporting is good, but talk of reducing the trade deficit is tantamount to silliness:
"As long as the U.S. imports more than 60% of its oil and retains a fondness for inexpensive goods made in China, there will be far more imports than there are exports...The most worrisome aspect of the trade situation is that much of the export gain can be attributed to the weak dollar, and that is not a situation that will last forever. The Fed and the White House continue to assert that the US is committed to a strong dollar policy, but there has been little evidence that this has really informed decisions of late. There is always talk that the US can dig itself out of its deficit and debt hole with the right amount of economic growth, and there continue to be those who assert that the improved export sector will be the ticket to some of that expansion. The reality is that the U.S. will not be able to create a trade surplus under any but the most trying conditions. The only way to reduce that gap is to drastically reduce imports and that is just not possible unless the economy slides into some kind of crushing depression. If this latest recession is not enough to eliminate the deficit, it is obvious that the U.S. will not want to see the kind of decline that would do the trick."
Brian Shappell, NACM staff writer