The Trade Gap

As international trade numbers are released this week there will perhaps be a great deal of dialogue about policies to promote a balance between exports and imports.

The estimate is the US will run a $45 billion trade gap for Sept. and probably more than $500 billion for the year.

This is a hefty sum. Adding $500 billion to GDP would create a significant number of jobs.

However, I believe most of the American trade deficit comes from energy imports and the trade imbalance with China.

I have argued in previous posts that America needs to aggressively reduce energy imports to stem the outflow of Dollars from the economy. We are a long way from achieving this goal.

As quantitative easing part II increases the price of oil imports, Americans will pay more at the pump for gasoline. Evidence exists that this will moderate consumption. However, there will continue to exist a large amount of oil imports for many years into the future.

The solution rests in greater efficiency of energy use in the US. This must be a top priority.