On Friday March 26th, 2021 the United States of America revealed some economic data that made history. Built on the foundation of government stimulus checks, a printing press, and Chinese manufacturing, the USA ran a trade deficit of $86.7 billion for merchandise goods in the month of February. The largest in the country’s existence.
A trade deficit is defined as “the amount by which the cost of a country’s imports exceeds the value of its exports”. This defining statistic illuminates the weakness of the American economy, its recovery, and of the Biden administrations stimulus packages. Lacking the productive capacity, the USA is dependent on foreign manufacturing to sustain its standard of living. The numbers are indicating President Biden is failing when it comes to his two main slogans of “Build Back Better” and “Buy American”.
If these merchandise trade deficits (which don’t include services) continue, the country will be importing over $1 trillion more than we are exporting which is about 5% of GDP. That doesn’t sound like many people are “Buying American”.
President Biden’s “Build Back Better” slogan may be even more damning to his reputation. According to economic data from the Federal Reserve website, as of February 2021 the USA has a total of 12,238,000 manufacturing jobs. That is less jobs than we had in 1950 with a population of 150 million citizens.
Do trade deficits matter? My opinion, it depends on how that deficit is settled. For the last 50 years it has been settled in dollars. When you have the privilege to create/print dollars, the deficits don’t matter…….Until they do.