Fix the Trade Deficit to End Jobs Drought (Update)
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (TheStreet) -- The Commerce Department Thursday reported the deficit on international trade in goods and services was $51.8 billion in March. This was up from $45.4 billion in February thanks to weakening conditions in Europe, and chronic deficits with China and in petroleum.
The $620 billion annual deficit is the most significant barrier to economic recovery and creating jobs, and oil and consumer goods from China account for virtually the entire problem.
Economists agree the pace of economic recovery has been too slow, because of too little demand for what Americans make.
Consumers are spending again -- the process of winding down household debt that followed when the Great Recession ended more than a year ago. However too many consumer dollars are going abroad to purchase Middle East oil and Chinese consumer goods and are not returning to buy U.S. exports. Consequently, businesses can't justify expanding U.S. facilities and hiring workers.
Since the economic recovery began in June 2009, the trade deficit has doubled and GDP growth has averaged a disappointing 2.4% a year. Unemployment has fallen from 10% to 8.1%, mostly because Americans have quit looking for work, not found jobs.
Like Obama, Ronald Reagan inherited a deeply troubled economy. He too implemented radical measures to reorient the private sector, and accepted large budget deficits to buy time for his measures to work. As Reagan campaigned for reelection, his recovery posted a 7.1% growth rate and unemployment fell much more rapidly than it has during the Obama recovery, even as more adults joined the labor force and looked for work.