trading.
Our new president opposed it, the union smashed it, and the unemployed blamed it. There is no reason. In terms of trade, employment and economic growth, the performance of the United States is not satisfactory.
Let's take a look at the data and then delve into the nuances. The infinite roar of reducing trade deficits and increasing employment opportunities may stumble through these nuances. On the contrary, the intricate understanding of the economy must go hand in hand with bold actions.
So let's sneak in.
US performance - trade, employment and growth
For the sake of authenticity, we turn to [through various manifestations] unbiased and authoritative sources. For the trade balance, we use the Swiss International Trade Commission ITC; for US employment, we use the US Bureau of Labor Statistics, the Bureau of Labor Statistics; and the overall economic data of the countries we attract at the World Bank.
According to the US International Trade Commission, the US trade deficit in 2015 was $88 billion, the largest deficit in all countries. This deficit exceeds the total deficit of the next 18 countries. The deficit does not represent an aberration; the US merchandise trade deficit averaged $780 billion over the past five years, and we have been in deficit for the past 15 years.
The commodity trade deficit touched key sectors. In 2015, consumer electronics lost $167 billion; apparel was $115 billion; home appliances and furniture were $74 billion; and cars were $153 billion. Since 2001, some of these deficits have increased significantly: consumer electronics has grown by 427% and furniture and appliances by 311%. In terms of imports to exports, clothing imports are 10 times, consumer electronics exports are 3 times; furniture and appliances are 4 times.
The car has a small portion of the inside line, and the deficit is relatively mild at 56% in 15 years, roughly equivalent to inflation plus growth. Imports over exports are disturbing, but relatively speaking, imports are only 2.3 times.
In terms of employment, the BLS reported that from 1990 to 2015, US manufacturing jobs fell by 5.4 million, a drop of 30%. No other major employment categories have lost their jobs. The four states in the "belt" region collectively reduced 1.3 million jobs.
The US economy is just stumbling. The actual growth rate over the past 25 years averaged only slightly above 2%. The increase in income and wealth during that period was mainly concentrated in high-income groups, making more Americans feel stagnant and painful.
The data portrays a painful picture: the US economy is plagued by a continuing trade deficit, manufacturing jobs are falling, and low growth is struggling. This picture points out - at least at first glance - that is an element of the solution. Countering a large number of imports.
Increased perspective - unfortunate complexity
Unfortunately, economics seldom succumb to simple explanations; complex interactions are often the basis of dynamics.
So let's take some extra points.
Although the United States has collected the largest trade deficit, this deficit is not the biggest. from
Percentage of gross domestic product [GDP] from
On this basis, China's hit rate is about 4.5%. The UK merchandise trade deficit is 5.7% of GDP; India is 6.1%, Hong Kong is 15%, and the United Arab Emirates is 18%. In the past quarter century, India's average annual growth rate has exceeded 6%, and Hong Kong and the United Arab Emirates have increased slightly by more than 4%. Turkey, Egypt, Morocco, Ethiopia, Pakistan and other 50 countries have a trade deficit of 9% of GDP, but an annual increase of 3.5% or higher.
Please note the term "commodity" trade deficit. Commodities involve tangible goods - cars, smartphones, clothing, steel. Services - Law, Finance, Copyright, Patents, Computing - Represents a group of different goods that are intangible, ie difficult to hold or touch. The United States has achieved a trade surplus here, with $220 billion, the largest trade surplus in all countries, significantly offsetting the merchandise trade deficit.
Trade from
deficit from
It also masks the total dollar value of trade. The trade balance is equal to exports minus imports. Of course, imports refer to goods that are not produced in a country and are also unemployed to some extent. On the other hand, the export represents the dollar value of the product that must be produced or supplied, thus representing the employment that occurs. In terms of exports, the US service industry ranked first, with commodities ranking second, with exports totaling $2.25 trillion annually.
What we are looking for now is not to prove that our trade deficit is benevolent or has no adverse effects. But these data can really ease our point of view.
First, in India, for example, we see that the trade deficit itself does not limit growth. Countries with a GDP base greater than the United States have grown faster than the United States. In the following, we will see examples of countries with trade surpluses, but these countries have not grown rapidly, again easing the conclusion that growth directly depends on trade balance.
Second, given the importance of exports to US employment, we do not want to take action to reduce the trade deficit, thereby limiting or hindering exports. The most important thing is that the profit margin of imports exceeding exports is small; efforts to reduce trade deficits and obtain employment opportunities in this area may lead to an increase in the number of exporting unemployed.
Unemployment nuances
As mentioned earlier, the manufacturing industry experienced a large amount of unemployment in the past quarter century, a 30% reduction, and lost 5.4 million jobs. Major industries take on greater losses proportionally. Clothing lost 1.3 million jobs, accounting for 77% of its US employment base; electronics employment fell by 540,000 or 47%, and paper loss was 270,000, accounting for 42%.
However, the state-by-state survey showed some twists and turns. While manufacturing belts have received attention, any state in the state - Pennsylvania, Ohio, Illinois, Indiana, and Michigan - has suffered the largest manufacturing loss in a state. Instead, California lost more manufacturing jobs than any state, with 677,000. Proportionally, North Carolina's manufacturing losses are equivalent to 8.6% of its total employment base, which is a loss of more than any of the five states.
Why are there no general discussions about manufacturing declines in California and North Carolina? Probably because they have produced a lot of new jobs.
In the past quarter century, the five countries under discussion have lost 1.41 million manufacturing jobs. During this period, the five states offset these losses and added 2.7 million new jobs, a strong response.
Similarly, the four non-band states mentioned above - California and North Carolina, plus Virginia and Tennessee - lost 1.35 million manufacturing jobs. However, these states offset these losses and created 6.2 million new jobs.
As a result, each manufacturing job in the state has been reduced by 1.9 jobs, while the manufacturing jobs in each of the four states have increased by 4.6 jobs.
Other countries imitate this difference. Employment growth rates in New York and New Jersey are lower than manufacturing unemployment rates [1.3 and 2.0, respectively], less than one in Rhode Island [at .57], and just over two in Massachusetts [at 2.2]. Overall, eight states in the Northeast [New England plus New York and New Jersey] lost 1.3 million manufacturing jobs, equivalent to 6.5% of the employment base, but each manufacturing jobforce increased by only 1.7 jobs.
In contrast, seven states with large manufacturing jobs and losses, but located in the belt, northeast and CA / VA / TN / NC Group, each manufacturing unemployment increased by 4.6. These seven are Maryland, Georgia, Mississippi, South Carolina, Alabama, Missouri and Arizona.
For these four groups, this is the percentage of employment growth in the past quarter century.
Northeast 12.6% 8 countriesBelt 12.3% 5 countries
VA / TN / CA / NC 30.2% 4 countries
The G7 accounts for 27.3% of the seven states
Imports will certainly lead to job unemployment. But the last two groups of countries rebounded more strongly. After a particularly good recovery, North Carolina once lost to furniture and clothing, losing 44% of its manufacturing jobs, but did not see its economic base stagnating.
why? Manufacturing losses caused by imports are only a determining factor in overall employment growth. Other factors - climate, taxes, living expenses, unionization [or lack], crowding [or lack], government policies, education base, demographic trends - equal or more impact on job creation. For example, North Carolina features universities and research centers; medium-sized and relatively uncongested cities [Charlotte and Raleigh]; low levels of unionization; moderate winters;
This does not dilute the difficulties that individuals, families and communities face in creating unemployment. Employment growth in other industries has not directly addressed the decline in manufacturing. High-paying jobs in other industries often require college or advanced degrees, and those who lose their manufacturing jobs may not have the jobs.
But what needs to be noted is. Even the lack of trade, technology and automation will increase the demand for university education. Manufacturing workers directly reduce construction; while workers control machines, complex computer-controlled machines are built. Operating these machines, designing these machines, programming these machines, and more and more types of work involve advanced degrees.
Think from a historical perspective. Automation has reduced farm employment, except for extinct elevator operators, ice conveyors and telephone switchboard workers. Similarly, today's automation has and will continue to affect manufacturing employment.
Trade deficit and national growth
Let us now return to the comparison between countries and find more insights. Earlier we saw strong economic growth in countries with trade deficits. Therefore, the deficit itself does not cause economic stagnation.
Let us look at the other side now - whether the trade surplus will lead to growth. China certainly realized both. In the past quarter century, they have grown by an average of 9-10% a year, and the trade surplus has been amazing...
Orignal From: Trade, employment and growth: the facts before stupidity
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