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Richmans' Trade and Taxes Blog
Trade Deficit Saps 2nd Quarter Growth
Howard Richman, 7/30/2010
Today's economic story is very simple. The Obama administration and Congress have been trying to pump up the economic tire, without first patching the trade deficit leak. The faster they pump, with stimulus after stimulus, the faster the trade deficits grow.
As shown in the chart below, taken from data released this morning by the BEA, increased purchases by consumers contributed 1.1% to 2nd quarter economic growth, increased fixed investment purchases by businesses contributed 2.2% to growth, increased purchases by government contributed 0.8% to growth, and inventory build-ups contributed 1.0%. But net exports sapped 2.7% from GDP growth as imports increased without a corresponding increase in exports. If you add it all up, GDP grew by 2.4%.
But inventory build-ups are not sustainable. Businesses produced more goods than they sold, something they will not keep doing. If you subtract inventory build-ups, economic growth was a paltry 1.4% annual rate during the second quarter. With such slow growth, the U.S. economy could remain depressed below 2007 levels for quite some time.
There is a simple way that Congress could get the economy going: PATCH THE LEAK, such as by enacting the scaled tariff.
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- Economists still failing to understand the effects of mercantilism
- Trade Deficit Saps 2nd Quarter Growth
- Pres. Obama's $787 Billion Recovery Act Has Produced Few Sustainable Jobs
- Geithner's job is to finance federal government expansion
- Some criticisms of our Scaled Tariff proposal
- Congress busts the budget to create 90,000 manufacturing jobs
- Prof. Blinder Believes He and Obama are Keynesians But Keynes Would Disown Them
- The Scaled Tariff would Resuscitate the U.S. Economy
- Real Policies for a Sustained Economic Recovery
- Fed: Possibly 5 or 6 years before sustainable growth
- Michael Pettis: U.S. is "likely to be swamped by a tsunami of foreign capital"
- Trade deficit rises again in May
- Outsourcing Production Is Committing National Suicide, Says Andy Grove, Former Intel CEO
- Geithner's Three Currency Manipulation Reports
- Obama Touts his Failing Trade Policy
- The First Step for a Sustainable Economic Recovery -- Balanced Trade
- The Currency Reform Bill Won't Work: What Should Replace It and Why
May 2010
April 2010
March 2010
February 2010
January 2010
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- Greg Richards: "We must be much more aggressive with mercantilist countries in enforcing the rules of the road so that we protect out production and technology."
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- Geithner's job is to finance federal government expansion
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- Congress busts the budget to create 90,000 manufacturing jobs
- The Scaled Tariff would Resuscitate the U.S. Economy
- Fed: Possibly 5 or 6 years before sustainable growth
- Michael Pettis: U.S. is "likely to be swamped by a tsunami of foreign capital"
- Trade deficit rises again in May
- Geithner's Three Currency Manipulation Reports
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- Steven Pearlstein calls for direct action against mercantilism
- Obama's G-20 Summit Setback -- we're published in American Thinker this morning
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- GreenJobsGate
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- Trading Away Productivity - Tonelson and Kearns in March 5 NY Times
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- A Review of W. Raymond Mills "Toward Managed Trade"
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- "Playing Chicken with China" - we're published in today's American Thinker
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- Peter Morici's Currency Conversion Tax to End Mercantilism
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- Google Has Its Rosa Parks Moment -- I'm published by Seeking Alpha today
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- Doha Round stalls over US demand that India and China open their markets
- Peter Morici: Free Trade is Failing America
- Calla Wiemer misunderstands Chinese mercantilism in Wall Street Journal
- Levy Economics Institute's analysis of Import Certificates to balance trade
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- Prof. Krugman and Chinese Mercantilism
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