The next update now posted: Jobs & 'Trade' Data Update Oct09, 11/19/09

Links to sections in this article:
Summary Notes
Causes of growing fiscal deficits?
On stimulus, "trade" anti-stimulus, and the GDP equation
- now includes analysis based on CBO data on deficit origins.
What to do about the 'trade deficit'?
Job Loss Data Summary: National, Colorado, Colorado Springs since their peaks.
Colorado Springs Job Picture
Jobs and "Trade" Details (added graphs of
- growth in part-time employment,
- Colorado Springs computer & semiconductor job losses, and
- Colorado Springs losses/gains in major categories)
Manufacturing Jobs & Trade Agreement History
Trade Deficit & Trade Agreement History
Advanced Technology Products & Green "Trade" Deficits
US Unemployment Rate - Official vs. Actual
US Unemployment Level - Official vs. Actual (now shows U-2 "job losers" graph)
Data Sources

Summary Notes

Irrational belief in the infallibility of the "free market" and "free trade" has led to devastating offshoring of good-paying manufacturing and IT jobs.  This has undermined the US economy, leading to its collapse. Nationally, policies continue to be a disaster for Mfg Jobs, IT Jobs, and Advanced Technology Products "trade".

Below I explain why both stimulus and trade policy reform are necessary. The tax cuts of recent years, ostensibly to stimulate the economy by increasing investment and supply, don't work when demand is collapsing.

The undermining of US wages is largely responsible for The 9/22/08 Economic Crisis ... collapsing demand has inevitably led to a collapsing economy. Yes, financial fraud and speculation precipitated the debacle, but the economy has become more and more unstable as U.S. wages have been systematically undermined.

• Nationally, through Jun 09, the U.S. lost 32.8% of manufacturing jobs and 23.6% of IT jobs since their peaks.
• Nationally, jobs haven't kept up with population growth ... Gap: 12.4 million jobs in Jun 09. Jun brought a 374,000 job loss. Job Losers (U-2) at a continued high of 6.2% of the labor force. The U.S. has lost 6.5M jobs since Nov 07.
• Colorado jobs also haven't kept up with population growth ... Gap: 360K jobs in May 09 (K= 1000s).
• Colorado Springs has been a major disaster for manufacturing and information technology, worse than the state or nation. The Springs has lost 47.2% of manufacturing jobs and 49.7% of IT jobs since their peaks. See the summary below.

John Williams on the currrent/worsening depression: That the root of the problem is falling demand from declining consumer income is also noted by John Williams (Shadow Government Statistics) in his DEPRESSION SPECIAL REPORT, 8/1/09 (subscription required):

U.S. Economy Is in a Multiple-Dip Depression. The grand benchmark revision of the national income accounts on July 31, 2009 confirmed that the U.S. economy is in its worst economic contraction since the first downleg of the Great Depression, which was a double-dip depression. The current economic downturn increasingly will be referred to as a depression, and it is far from over. There will be intermittent blips of new activity, such as the current cash-for-clunkers automobile giveaway program that appears to be generating a one-time spike in auto sales. Yet, this downturn will continue to deteriorate, proving to be extremely protracted, extremely deep and particularly nonresponsive to traditional stimuli.

As discussed in recent writings, the economy suffers from underlying structural problems tied to consumer income, where households cannot keep up with inflation and no longer can rely on excessive debt expansion for meeting short-falls in maintaining living standards. The structural issues are not being addressed meaningfully and cannot be addressed without a significant shift in government economic and trade policies, which under the best of circumstances still would drag out economic woes for many years.

The current depression likely will show multiple dips in business activity, as was seen during the Great Depression and in the double-dip recession of the early-1980s. I shall argue that the current downturn started at least a year earlier than the December 2007 onset proclaimed by the National Bureau of Economic Research (NBER), official arbiter of U.S. recessions. The current depression is the second dip in a multiple-dip downturn that started back in 1999, and it preceded and in fact was the proximal trigger for the systemic solvency crisis that rose to public view in August 2007. The ensuing systemic problems did not cause the slowdown in business activity, but they exacerbated it significantly.

While the current circumstance should become recognized as a "depression," worse lies ahead as the U.S. government’s long-range insolvency and current efforts at debasing the U.S. dollar trigger a hyperinflation in the next five years. Risks for the onset of a hyperinflation in the United States are particularly high during the next year. As will be discussed in the soon-to-be-updated Hyperinflation Special Report (see the existing April 2008 version for basic background), the United States would be particularly hard hit by such a circumstance. Unlike Zimbabwe, which has been able to maintain some level of functioning commerce during its hyperinflation, due to the backstop of an active black market in U.S. dollars, the United States has no such backstop. Accordingly, a U.S. hyperinflation likely would force cessation of regular commerce, triggering a great depression of a magnitude never before seen in the United States.

[Added 10/7/09. Robert Fisk asserts that the dollar will decline as foreign governments abandon the dollar.

The demise of the dollar By Robert Fisk, 10/6/09

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading ]

[Added 10/7/09. Fisk's article had a dramatic effect:

Dollar tumbles on report of its demise By Stephen Foley, 10/7/09
Gold price at record high as Independent story sends global markets into a frenzy

... Economists noted that the US resisted pressure to include a promise to protect the stability of world currencies in last weekend's communiqué from the International Monetary Fund (IMF), sparking growing concern that the Obama administration could be content to see the currency fall. That would make US exports more competitive and could spark a manufacturing jobs revival.

Overseas governments are in a bind because they hold trillions of dollars as reserves to protect them against a financial crisis. They are seeing the value of those reserves decline, but starting to swap them for gold or other currencies could deluge world markets with unwanted dollars and send the value of the greenback even lower. The situation is particularly sensitive for oil-producing nations, who are paid in dollars for their exports and therefore hold high dollar reserves. ...

[Added 10/7/09. Mike Whitney says it's private industry, not governments, that will lead the way to dollar collapse.

Dollar Hysteria: Is the Sky Really Falling? by Mike Whitney, 10/6/09

Yes, the dollar will fall, (eventually) but not for the reasons that most people think. It's true that the surge in deficit spending has foreign dollar-holders worried. ... The real reason the dollar will lose its role as the world's reserve currency is because US markets, which until recently provided up to 25 percent of global demand, are in sharp decline. ...  US consumers are buried under a mountain of debt, which means that their spending-spree won't resume anytime soon.  On top of that, unemployment is soaring, personal wealth is falling, savings are rising, and Washington's anti-labor bias assures that wages will continue to stagnate for the foreseeable future. Thus, the American middle class will no longer be the driving force behind global consumption/demand that it was before the crisis.  Once consumers are less able to buy new Toyota Prius's or load up on the latest China-made widgets at Walmart, there will be less incentive for foreign governments and central banks to stockpile greenbacks or trade exclusively in dollars. ... As private industry veers away from the dollar, governments, investors and central banks will follow. ]

I don't know which will lead the way, but the dollar will fall.

How trillion dollar deficits were created ... based on CBO data

Causes of growing fiscal deficits? All this is of course, according to "conservatives," all Obama's fault though he's only been in office 6 months. Must read: America’s Sea of Red Ink Was Years in the Making By DAVID LEONHARDT, 7/9/09. Here's a summary of the findings:

37% of the deficit was caused by what the CBO calls the "economic cycle." [Note: that's actually not from a "cycle", but from "long-term structural changes" that have destroyed the economy thanks to "free trade" & deregulation.] 33% is from new legislation signed by Bush. 20% is from Obama’s extension of several Bush policies [those who supported Bush shouldn't complain about the above ... they supported them].

"About 7% comes from the stimulus bill that Mr. Obama signed in February. And only 3% comes from Mr. Obama’s agenda on health care, education, energy and other areas. If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits. ..."

On the "banking crisis": Conservative historian and proponent of a McCain presidency, Niall Ferguson, had this view, 4/26/09:

Ferguson also agreed with advice offered by Paul Krugman (an "unprecedented" event, by Ferguson's own admission) that the "only way to deal with these big insolvent institutions is to take them into temporary conservatorship, let's use that lovely euphemism not nationalization, as happened with Fannie Mae and Freddie Mac, institutions that they quite closely resemble anyway. It's going to happen; we're going to end up doing this. And you restructure them."

Unfortunately, Obama is not doing this even though he's being charged with taking over the banks and being a "socialist." As done by Bush's Treasury Secretary Henry Paulson, Obama's Tim Geithner, former head of the New York Fed, is bailing out the banks with few, if any, strings attached. That's the banks controlling government, not the government controlling the banks. That's a lot like fascism, not socialism.

Looking at the graphs below, is there any wonder that the U.S. economy is in shambles thanks to "free trade" offshoring? Examples of what "trade" policy has produced: Tent Cities in LA 3/16/09, Cities Deal With a Surge in Shantytowns 3/25/09, Tent city becomes home in tough times, CNN on Seattle 4/13/09, Tent Cities: An American Tradition 3/19/09, Economic casualties pile into tent cities - USATODAY.com, 5/6/09.

The figure at this link shows another examination of what's happening with the deficit. Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years. From the article, Critics Still Wrong on What’s Driving Deficits in Coming Years Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers By Kathy Ruffing and James R. Horney, 6/28/10

On stimulus, "trade" anti-stimulus, and the GDP equation

Obama's stimulus is necessary, but not sufficient, and will fail unless the "trade deficit" is addressed ... and so far it doesn't appear that it will be. As Uchitelle wrote in Economy Falling Years Behind Full Speed By LOUIS UCHITELLE 4/7/09 : "... imports, entering the country in ever greater quantities, will slow any expansion by siphoning sales from domestic producers."

The Rock and the Hard Place: Obama needs the Chinese to keep buying U.S. treasury bills to fund necessary stimulus to address the short-term cyclical recession; therefore he can't upset them by confronting them on "trade" issues. But because Obama won't address "trade" issues that have caused a long-term secular economic decline, the stimulus will fail. Bummer. :-(

Damn. We are so screwed.

Obama’s Strategy to Reverse Manufacturing’s Fall By LOUIS UCHITELLE 7/20/09

If the Obama administration has a strategy for reviving manufacturing, Douglas Bartlett would like to know what it is. ... President Obama, agreeing in effect, has declared, “The fight for American manufacturing is the fight for America’s future.” ...

So far, however, Mr. Obama’s administration has not come up with a formal plan to address the rapid decline. Instead, it has pursued ad hoc initiatives — bailing out General Motors and Chrysler, for example, and pushing green energy by supporting the manufacture of items like wind turbines and solar panels. ...

One tactic for strengthening the manufacturing sector, in the administration’s view, would be a shift in tax policy. The research and development tax credit, which is now subject to renewal by Congress, would be made permanent, encouraging much more R.& D. among manufacturers, a senior Commerce Department official argued. And foreign taxes paid on profits earned overseas would not be deductible in this country until the profits were repatriated, a restriction that might discourage locating factories abroad.

The goal is to arrest manufacturing’s dizzying decline. It “was the pillar on which we built the middle class,” said Thea Lee, policy director for the A.F.L.-C.I.O., “and it is hard to see how you rebuild the middle class without reviving manufacturing.”

Hard to see? For sure ... because it's impossible. R.& D investment tax credits won't help unless the credits are only allowed if manufacturing stays here. Why should this be? Because the nation does not fully benefit from the investment unless manufacturing stays here.

The equation for GDP is useful for explaining why both Stimulus and Trade Policy Reform are necessary. It's an important equation -- it's really simple math, not rocket science:

Gross Domestic Product = GDP = C+I+E+G

That's:
Consumer spending (C) + Investment (I) + Net Exports (E) + Government Spending (G)

C: Consumer spending has collapsed because of undermined wages.
I: Investment has collapsed due to lack of demand because of those undermined wages.
E: Net Exports = Exports - Imports ... we have an annual ~$700B deficit ... see the Trade Deficit & Trade Agreement History graph below.
G: Government Spending is all that's left ... and that's why stimulus is needed.

References on the GDP equation:
Why the Stimulus is Needed by Hale "Bonddad" Stewart, 1/31/09
Senator McConnell -- Idiot of the Highest Order by Hale "Bonddad" Stewart, 12/29/08

Unfortunately, compared to the annual ~$700B "trade" deficit alone, a $787 billion stimulus package added to G (Government spending) doesn't look all that big. Considering also collapsed C (Consumer spending) & I (Investment), it's apparent it's not enough.

Why has Consumer spending collapsed? Wages for the Bottom 80% have risen by 23.5% from 1979 through 2006 ... for the Bottom 20% it was 11%. For the Top 1% (average 2006 income = $1.2M) the gain has been 256%, 10.9 times better. than the Bottom 80% and 24 times better than the Bottom 20%. This, with Wealth sucked to the top, is the reason Consumer spending has collapsed now that the mortgage bubble has popped and people can no longer refinance their homes and pocket cash. For more data, see Data on Income & Tax Distributions, 7/17/09.

Look at it this way: Thanks to what's called "free trade", the U.S. has experienced nearly 3 decades of major anti-stimulus "trade" deficits. From 1980 through 2008, the cumulative "trade deficit", the "trade debt", has totaled over $7 trillion, with $5.1 trillion of that from 2000 through 2008. The cumulative trade deficit so far in 2009 through May is $146B ... that's another $146B in anti-stimulus, more than has been spent of the stimulus package ($64B paid out as of Jul 10).

Compare that $7 trillion in cumulative "trade" anti-stimulus against the current $787 billion stimulus package and it's quite obvious the latter will be ineffective. "Free trade" has been like an anti-matter black hole that has sucked prosperity from the U.S. economy.

Note: Recall that I put "free trade" in quotes because "transfer of the factors of production" is NOT "trade."

And damn, even if the current stimulus were enough, it's a path to long-term debt and hyperinflation. The "trade" deficit must be addressed! But then there's that Rock and a Hard Place squeeze noted above. Oh, my. Did I mention we are so screwed?

A larger excerpt from John Williams' 4/8/08 article on Hyperinflationary Depression is included below, but it's worth reading twice. So-called "conservatives" are already blaming the coming collapse on Obama, but Williams observed in 2008 that we were already well on the way to a Hyperinflationary Great Depression:

The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement. ...

The U.S. economy is in a deepening structural change that has resulted from U.S. trade policies that have driven the U.S. manufacturing base offshore. As a result, a large number of related, high paying jobs have been lost to U.S. workers.

As shown in the accompanying graphs, as the U.S. trade deficit has risen to the highest level for any country in history, U.S. average weekly earnings, adjusted for inflation, have fallen. ...

The cost of those cheap products from China has been enormously greater than what we've paid in dollars.

What to do about the 'trade deficit'? (updated 1/10/14)

When anyone mentions doing anything about this, the response is the question: So you want to close the borders? Or ... Well, don't you know the Smoot-Hawley Tariff started a trade war that caused the Great Depression! (not true, see Smoot-Hawley Fiction). And don't you know that NAFTA was great for the U.S. economy because it increased exports by 3X (yes, but imports increased by 5X to massively increase the trade deficit, see The NAFTA Nemesis).

Also see Smoot-Hawley Hogwash that explains that the U.S. is already in a trade war and we've lost. But we haven't been defeated; we've unilaterally surrendered. "Free trade" proponents did not simply lead the surrender, they collaborated with the enemy.

No, the answer is not to "close the borders", but instead what's absolutely necessary is to create balance. What a radical concept!

Instituting a policy to create Balanced Trade would not be "starting a Trade War" ... it would end the war being waged against the U.S., which has surrendered!

To create "Balanced Trade" the U.S must use Warren Buffett's market-based, outcome-based Import Certificates mechanism:

If a country purchases products or services from the U.S., then it can sell that amount back to the U.S. If it does not want to sell to the U.S., it can sell its Import Certificates to another country that does want to sell to the U.S. This effectively deals with what he describes as "a shifting maze of punitive tariffs, export subsidies, quotas, dollar-locked currencies, and the like."

This market-based mechanism would produce the desired outcome: balanced trade. This is necessary because anything out of balance will be, WILL BE, brought back into balance. The more out of balance it's allowed to become, the more severe will be the correction ... and we're headed for a very severe correction.

This market-based, results-oriented approach is necessary because there are so many factors affecting "trade" that fighting them one-by-one, considering the economic power opposing change is a losing proposition. Among the factors are: taxes, subsidies (see The Explosive Rise of Subsidies to Chinese Industry), dumping practices, labor rates, labor standards, environmental standards, transfer pricing practices.

It's vitally important to realize that much of what's called "trade" is not trade at all. Trade is when you make something, I make something and we trade. Much of what's happening is "transfer of the factors of production" ... transferring capital to another country, polluting that other country and using its subsistence-level labor ... to make a product over there to sell it here at a cost that will not support a U.S. standard of living over here. When it comes to undermining the U.S. standard of living, it seems that America is not all that "exceptional" at all.

The deficit of real concern is not the "fiscal deficit" that's mostly we owe to ourselves, but the "trade deficit" ... that's what we owe to other nations.

Read Warren Buffett’s October 2003 Fortune Magazine article that explains his approach to addressing the trade deficit.

Job Loss Data Summary: National, Colorado, Colorado Springs since their peaks

Job Loss Summary

Comparison of Percentage of Manufacturing Jobs Lost

Mfg Job Loss Comparison by Region

Comparison of Percentage of IT Jobs Lost

IT Job Loss Comparison by Region

Woe is Colorado Springs ... see also the graphs and table below showing job losses.

Jobs and "Trade" Details

US Job Growth has nowhere near kept up with Population Growth ... especially as jobs have been lost. The gap is 12.4 million jobs. There are now 6.5 million fewer jobs than in Nov 07.

In June, the Seasonal Adjusted Employment Level (LNS12000000) declined by 374,000 jobs, compared to a 437,000 jobs lost in May.

In Jun, persons who have another job hold about 7.2 million existing jobs; that's 5.1% of employment. The average for the first 6 months of 2009 is 7.5M jobs. There were 8M who held multiple jobs in Aug 2008. See the "multiple jobholders" graph at the bottom of Employment & Unemployment and BLS site for the latest.

The number of jobs shrinks and at the same time the number of part-time jobs increases. From around Jan 01 to Jan 05, the number of part-time jobs increased by about 2 million. There was relative stability for the next ~3 years. Then from Jan 08 to Jun 09 the increase was about 2.5 million.

The Rise in Part-time jobs

Population increasing can leave a huge jobs gap when jobs don't decline; it gap increases very quickly when the number of jobs decline.

US Job "Growth" and the Gap between Jobs Needed and Official Employment

National Manufacturing Job Trend ... major resumption of downward trend since mid-06 ... still continuing downward at a rapid pace.

National Mfg Jobs Trend ... note the downward acceleration

Manufacturing Jobs & Trade Agreement History

Here's a graph, suggested by Paul Carson and first included two months ago, showing average U.S. manufacturing jobs for each year along with 'trade-related' agreements. Note the downhill slide began in the 80s with the U.S. giving China Most Favored Nation status. But it really went over the cliff when the U.S. granted China Permanent Normal Trade Relations (PNTR). That coincides with the real cliff in the loss of manufacturing jobs. A coincidence? I don't think so.

Note: Originally Normal Trade Relations (NTR) was called Most Favored Nation (MFN) status, but that sounded just too cosy to have with China, so the free traders changed the name.

The graph shows that the rapid loss of manufacturing jobs has been since China got PNTR. But the growth of manufacturing jobs stopped back in 1980 -- that's 28 years ago when China got MFN status.

National manufacturing jobs with dates of 'trade'-related agreements

National IT Job Trend. Bummer, people who lost their manufacturing jobs retrained for these jobs. But somehow the US needs 65,000 H-1B visas to import workers because there's a shortage?

U.S. Employed Foreign Guest Workers Outnumber Unemployed Techies 5/28/09

It is no secret that the H-1B visa program is rife with fraud and abuse. The program allows American companies to exploit foreign IT workers at the expense of Americans, drives down the wages of all those in the field and costs the U.S. countless tax dollars.

... “in January of 2009, the total number of workers employed in the information technology occupation under the H-1B program substantially exceeded the 241,000 unemployed U.S. citizen workers within the same occupation."

... a recent study conducted jointly by researchers at New York University's and the University of Pennsylvania's business schools ... found that the use of H-1B visa workers by U.S. companies drives down the wages of American IT workers by as much as six percent.

"We simply sought to dispel the myth that globalization generates no losers," the researchers wrote.

Seriously now, this would be laughable if it weren't so sick and despicable. Why is it U.S. policy to systematically undermine the educational investment of its citizens by causing them to lose their jobs and depressing the pay of those who do have a job? Answer: to depress wages and increase profits ... to increase return-to-capital and reduce return-to-labor.
_________

Added 7/8/09: And they want even more. Incredible!

Task Force to Recommend Overhaul of U.S. Immigration System By Spencer S. Hsu, Washington Post Staff Writer, July 8, 2009.

A bipartisan task force will recommend today that the United States overhaul its immigration system in response to national security concerns, saying that the country should end strict quotas on work-based immigrant visas to maintain its scientific, technological and military edge.

"The continued failure to devise and implement a sound and sustainable immigration policy threatens to weaken America's economy, to jeopardize its diplomacy, and to imperil its national security," concluded an independent Council on Foreign Relations panel, co-chaired by former Florida governor Jeb Bush (R) and former Clinton White House chief of staff Thomas V. "Mack" McLarty III.

The report comes as President Obama and Congressional Democrats say they expect to begin debate on a comprehensive immigration plan within a year. But key Republicans -- including  Sen. John McCain (R-Ariz.), the 2008 Republican presidential nominee and co-sponsor of previous overhaul legislation -- have said a plan must include expanding temporary-worker programs. ...

Edward Alden, the task force's director and a CFR fellow, said the involvement of Bush, a prominent national Republican and the brother of former president George W. Bush, and McLarty, a Democrat and senior international fellow at the U.S. Chamber of Commerce, was intended to create political space for centrists in both parties.

The Council on Foreign Relations, Republicans, the U.S. Chamber of Commerce ... the usual suspects ... supporters of "free trade" and undermining wages. Excellent!
___________

Many of those who lost their jobs in manufacturing retrained in IT, but those jobs are going, too. For what jobs will retrain for now? Note that Advanced Technology Products jobs are being lost, too? (... see below ...) The truth is they'll be expected to get jobs at WalMart.

National IT Jobs Trend

Colorado Manufacturing Job Trend ... also accelerating downward. This graph is likely going to need a new minimum Y-axis value next month.

Colorado Mfg Jobs Trend

Colorado IT Job Trend ...

Colorado IT Jobs Trend

Colorado Non-Farm Jobs Trend. Colorado would need another 360,000 jobs to have kept up with population growth. Colorado has lost 96,700 jobs since Aug 08 ... see the chart below for jobs lost by month.

Colorado Non-Farm Jobs Trend .. Gap increasing

Colorado Springs Job Picture

Colorado Springs Manufacturing Job Trend ... also accelerating downward ...

Colorado Springs Mfg Jobs Trend

Colorado Springs IT Job Trend.

Colorado Springs IT Jobs Trend

Think about this: 47% of Mfg and 50% of IT jobs lost from Colorado Springs. Read about this in the corporate media that promotes "free trade"? Manufacturing and IT jobs have taken big hits, for a total 19,800 jobs lost since their respective peaks; while other jobs have come in, there have not been enough to offset the losses.

The chart below shows that as of May, Colorado Springs has lost 12,400 jobs since Nov 07. Can there be any wonder Colorado Springs is in so much financial trouble? For an analysis of what to do about this, see Economic Development: What to do locally?

Colorado Springs Nonfarm Job Trend

Jobs in what areas have been gained and lost? You can do your own research on the BLS site. Here are some examples of what's happened. Note this local data is not seasonally adjusted, so some of the sectors show considerable seasonal variation. Below is a bar chart showing the percentage losses May09(prelim) - Mar07.

Colorado Springs Job Gains & Losses ... mostly losses!

Look at the drastic decline in Computer jobs in Colorado Springs since the Apr 01 peak ... 61.5%! Just Amazing.

Colorado Springs Computer & Electronics Products Jobs Trend

Look at the even faster decline of Semiconductor jobs in Colorado Springs ... 70.7% lost!!! Semiconductor and Other Electronic Component Mfg is a subcategory of (included in) the category above.

Colorado Springs Semiconductor Jobs Trend

Trade Deficit & Trade Agreement History

Note on the Census Bureau and "trade" deficit history graph below:
Census Bureau: Trade Deficit Decreases in January 2009 The Nation's international deficit in goods and services decreased to $36.0 billion in January from $39.9 billion (revised) in December, as imports decreased more than exports. (13 March 2009)

The "trade" deficit has declined somewhat in 2007 & 2008. This is indeed because the decrease in imports was more than the decrease in exports. That's because the U.S. economy is failing.

Note that NAFTA, China PNTR, and China into the WTO have been on the forefront of massive borrowing to support the "trade" deficit. The "trade" deficit was growing exponentially through 2006. It's no surprise that that's over; no exponential increase can be sustained.

The graph shows that the trade deficit began its major climb in 1996 following NAFTA in late 1994 (that's 14 years ago). It would have been sooner, also in 1980 (that's 28 years ago), had Reagan's Plaza Accord not devalued the dollar -- a form of theft from everyone who holds, or is paid in, dollars.

U.S. Trade deficit with dates of 'trade'-related agreements

Revised data shows the trade deficit in 2007 & 2008 was greater than previously indicated:

US Trade Deficit Revised ... greater than previously indicated

Advanced Technology Products & Green "Trade" Deficits

This should be one of the most frightening trends of all. The U.S. is so proud of its technological prowess. However, most people are unaware of the rate at which we're losing it.

The U.S. had a $38.4B surplus in 1991. The ATP "trade" balance in 2008 was -$55.6B, a deficit much larger than the surplus in 1991.

This is the "progress" the U.S. has made thanks to the "free traders" that have undermined the U.S. economy?

We've been told that the US is going to let others (e.g., China) do the low-tech manufacturing and the US is going to retain high-tech manufacturing. So much for that; it's not true. It should be no surprise that students aren't attracted to high-tech education. It's difficult subject matter ... and high-tech jobs are disappearing. Note what's happened (shown above) to Computer & Electronic Product Manufacturing: a 26% drop in employment over just the last two years.

Advanced Technology Products "Trade" Balance Trend - Annual ... a downhill slide

Here's the monthly ATP trade balance trend since 2006 with a linear least-square fit showing the overall downward trend.

Advanced Technology Products "Trade" Balance Trend - Monthly

There's not just an advanced technology problem; it's a green technology problem, too! With a "green" trade balance of -$8.9 billion in 2008, it's "green" technology, too. "Green jobs" won't develop if we continue to offshore the work.

Green Trade Balance By Samuel Sherraden, New America Foundation, 6/22/09

... the United States ran an overall green trade deficit of -$8.9 billion in 2008, including a deficit of -$6.4 billion in the critical category of renewable energy, one of the main targets of the Obama administration's green agenda.  The U.S. economy also suffered a significant deficit in the pollution management category. ...

If current trends continue, the green trade deficit can be expected to widen further as the administration's agenda increases domestic demand but without sufficient measures to increase domestic production.  If the deficit continues to grow, the United States will forego the creation of millions of high-wage, high-skill green manufacturing jobs and lose its potential to be a global producer as well as a consumer of green technologies.

US Unemployment Rate - Official vs. Actual

While there's concern that the Official Unemployment Rate (U3) rose to 9.5% in Jun, there should be even more concern. What I call the "Real Unemployment Rate" is 23.0%.

It would be a mistake to dismiss this as absurd. John Williams (Shadow Government Statistics) has his SGS-Alternate Unemployment Rate for Jun at 20.6% ... my estimate isn't all that much different.

From John Williams, 7/19/09:

Unemployment Rate. Shown are two official seasonally-adjusted unemployment measures, U.3 and U.6, and the SGS-Alternate Unemployment Measure.  The various measures inched higher in June, reflecting continued deterioration in labor-market conditions. The June rates stood respectively at 9.5%, 26.5% and 20.6%, up from 9.4%, 16.4% and 20.5% in May. ...

The average person has a pretty good sense as to whether or not he or she is unemployed, regardless of varying official definitions. It is to the broad, common-experience unemployment measure that the SGS-Alternate Unemployment Measure is addressed; its calculation is described below. Ask people simply if they are employed or unemployed, and the response likely would indicate an unemployment rate much closer to 20.6% than to 9.5%.

As to how the rates line up historically, the widely circulated estimate of 25% peak unemployment in 1933 of the Great Depression was guesstimated from a variety of sources, well after the fact. Unemployment was not surveyed in the 1930s; such was started by the government in 1940. The 1933 estimate appears to reflect what I would call a broad unemployment definition. Where roughly 28% of employment in 1933 was agricultural, the nonfarm unemployment rate was estimated then at a peak of 34%. With less than 2% of current employment accounted for by agriculture, the 34% unemployment rate might be the better one to use in comparing the 1933 circumstance with today’s.

Putting the SGS-Alternate Unemployment Measure into perspective, in the best of times, it would have fallen perhaps into the 8% to 9% range. Now topping 20%, it likely is comparable to the depths of the 1973 to 1975 recession and still is well shy of the 34% peak reported in 1933.

General background note: U.3 is the popularly followed unemployment rate published by the Bureau of Labor Statistics (BLS), while U.6 is the broadest unemployment measure published by the BLS.  U.6 is defined as total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. Marginally attached workers include short-term discouraged workers who survived redefinition during the Clinton Administration.  The SGS-Alternate Unemployment Measure simply is U.6 adjusted for an estimate of the millions of long-term discouraged workers defined away in 1994 — those who had been "discouraged" for more than one year.

Williams' Employment and Unemployment Reporting primer is educational, as is his special report on the coming Hyperinflationary Depression. Note the latter was written on 4/8/08, well before the stimulus package that has raised so much ire; we were already well on the way to a Hyperinflationary Great Depression. Excerpt:

The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement. ...

The U.S. economy is in a deepening structural change that has resulted from U.S. trade policies that have driven the U.S. manufacturing base offshore. As a result, a large number of related, high paying jobs have been lost to U.S. workers.

As shown in the accompanying graphs, as the U.S. trade deficit has risen to the highest level for any country in history, U.S. average weekly earnings, adjusted for inflation, have fallen. Even using official CPI for deflation, current real earnings are below their peak back in the 1970s. Adjusted for the SGS-Alternate CPI measure, real earnings have been falling since the early 1980s. ...

The effect of this structural change has been that most consumers have been unable to sustain adequate income growth beyond the rate of inflation, unable to maintain their standard of living. The only way that personal consumption — the dominant component of GDP — can grow in such a circumstance is for the consumer to take on new debt or to liquidate savings. Both those factors are short-lived and have reached untenable extremes. Debt expansion and savings liquidation both were encouraged by the investment bubbles created by Alan Greenspan; he knew that economic growth could not be had otherwise. Part of what is happening today is payback for those policies.

Related:

Part-Time Workers Mask Unemployment Woes By DAVID LEONHARDT 7/14/09

The national unemployment rate has risen to 9.5 percent, the highest level in more than a quarter-century. Yet it still excludes all those who have given up looking for a job and those part-time workers who want to be working full time.

Include them — as the Labor Department does when calculating its broadest measure of the job market — and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California. In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it.

Almost nobody believes that unemployment has finished rising, either. ...

Looking at the graphs you can see why I sure don't.

Another report noting the major understatement of unemployment is Not Out of the Woods: A Report on the Jobless Recovery Underway by Niko Karvounis 6/8/09. Excerpt:

Because of the incompleteness of official measures, Leo Hindery, Chairman of New America’s Smart Globalization Initiative, in cooperation with New America’s Economic Growth Program, has constructed a broader measurement of unemployment called effective unemployment. Effective unemployment incorporates the BLS’ more inclusive U6 measurement along with the 4.4 million-strong “labor force reserve” to give a more accurate accounting of the number of Americans lacking full-time, productive work. Currently, the effective unemployment total is 30.2 million people, more than twice the official BLS unemployment estimate. This number—when compared against a labor force measure that includes the 6.6 million Americans who report wanting work, who the BLS does not officially include in its calculations—represents an alarming 18.68 percent effective unemployment rate (Figure 1).

I maintain this latter is also an understatement. What I call the "Real Unemployment Rate" is more like 22.7% and 41.4 million persons. My number includes adding to the government's U-6 statistic those extra in the Orwellian classification, "Not in labor force, but Persons who currently want a job". It also adds those needed to keep up with population growth ... see the gap at the 4th figure from the top ... that's 11.9 million persons.

For how I arrive at these numbers see Unemployment: Official, Effective, Real. For the real-life impact see There's no 'free market' for Labor. Ever wonder why the official poverty rate in America is between 12% and 13%? It's no coincidence.

Different Measures of the Unemployment Rate

Below is the Bureau of Labor Statistics data on Job Losers: U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force. With this many job losers in a month, there's no way the economy will level off, much less revover, anytime soon.

Job Losers - the BLS U-2 rate: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force

US Unemployment Level - Official vs. Actual

There are now more like 41.9 million persons unemployed in compared to the official U-3 number of 14.7 million and U-6 number of 25.9M. None of this counts the underemployed. In 2006 there were 36.5 million people in poverty; no wonder.

Different Measures of the Unemployment Level

Concerned yet?

Data Sources

U.S. Employment & Unmemployment found at historical data for labor force based on the household survey

• • Table A-1. Employment status of the civilian population by sex and age. Includes those considered "Not in labor force, Persons who currently want a job"
  • Table A-12. Alternative measures of labor underutilization, U-1 through U-6

U.S. Population data at U.S. Census, Estimates

State and Area Employment, Hours, and Earnings Find Colorado and Colorado Springs data here for Total Nonfarm, Manufacturing and Information Technology, and other states, regions, & categories

Colorado Population by Region 2000 - 2006

U.S. International Trade In Goods and Services, Historical Series

U.S. Trade in Goods (Imports, Exports and Balance) by Country find China, Mexico here.

Advanced Technology Products at FT900: U.S. International Trade in Goods and Services, Exhibit 16

Unemployment: Official, Effective, Real, 9/12/06. Calculations of different measures of the unemployed, levels and percentages. Includes those who want a job now but are classified as "not in the labor market" and additional jobs needed to keep up with population growth since April 2000 when employment began to decline.