President Joe Biden delivered a recent speech to hail economic progress during his administration and to attack congressional Republicans for their proposals on the economy and the social safety net. This was echoed in Biden’s recent state of the union speech.
But when even lefty CNN fact-checks the Democratic “great” economy – you know something is wrong. CNN said that some of Biden’s claims in the speech were false, misleading, or lacking critical context – see here CNN’s breakdown of Biden’s 14 false claims.
Here we go again. Yet another sign that the Biden economy is nowhere near being healthy. The US trade deficit in goods and services in 2022 skyrocketed by 12% to an all-time record high of $948 billion, according to the Commerce Department. See this in the chart below and learn more here.
The US has recently ha always don’t well in services exports. However, even this, though positive, is on a downward trend. The services surplus of $244 billion (green) was dwarfed by the trade deficit in goods, which worsened by 12%, to $1.19 trillion, by far the worst ever (red). See this in the chart below.
A trade deficit is not a sign of a vibrant economy. Instead, it’s a negative for GDP, a negative for US jobs, and a negative for the overall economy. It exists because Corporate America went in search of cheap labor and products to fatten up its profit margins.
Trade balances refer to the difference between a country’s exports and imports of goods and services. A trade deficit occurs when a country imports more goods and services than it exports, while a trade surplus occurs when a country exports more than it imports.
While trade surpluses can be seen as a positive sign for a country’s economy, trade deficits can have significant negative impacts. Below are some reasons why trade balances are crucial for a country and why trade deficits are not good.
Currency Depreciation – Trade imbalances can lead to currency depreciation, as a country’s central bank must print more money to pay for the excess imports. This results in a decrease in the value of the currency, making exports more expensive and imports cheaper. This, in turn, makes it more difficult for the country to compete in the global market as its goods and services become less competitive.
Increased Debt – When a country runs a trade deficit, it must borrow money to pay for the excess imports. This results in an increase in the country’s debt, which can be a significant burden on the economy. Over time, the interest on this debt can become unsustainable, leading to financial instability and a decrease in the standard of living for the country’s citizens.
Dependence on Foreign Countries – A trade deficit also increases a country’s dependence on foreign countries. If a country imports a significant amount of its goods and services, it becomes more vulnerable to changes in the global market, such as fluctuations in the price of oil or economic crises in other countries. This dependence on foreign countries can also lead to decreased bargaining power in international trade negotiations as the country becomes more reliant on its trading partners.
Job Losses – Trade imbalances can lead to job losses in a country as imports displace domestic production. If a country imports a significant amount of goods and services, it may not have enough demand for its domestic industries, leading to layoffs and reduced employment.
Despite what Joe Biden says about the economy, one can not look at any one number alone. The trade deficit is just one more piece of evidence that shows that the US economy is not going in a good direction.
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By Tom Williams