Cutting Annual Trade Deficit By $300 Billion Would Increase GDP, Create Jobs

Tuesday, the Commerce Department is expected to report the June deficit on international trade in goods and services was $43.0 billion. Overall, the deficit is up from $25 billion when the economic recovery began in mid-2009, and poses the most significant barrier to stronger economic growth.

Household spending has recovered, but too many of those dollars still go to pay for imported oil and consumer goods from China and cars from Japan. In the second quarter, gross domestic product (GDP) growth was a paltry 1.7 percent — consumer spending contributed 1.2 percentage points. However, the increase in the trade deficit subtracted 0.8 percentage points — the growth in imports from Asia and oil negated two-thirds of the increase in consumer spending.

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