The manufacturing trade deficit hit a record $65.34 billion in October, the government announced today. While exports rose by $654 million from September to October, imports of manufactured goods shot up almost $10 billion to $151.28 billion.
The record deficit “should put to rest widespread claims by the president and others that American manufacturing is in renaissance mode,” said Alan Tonelson, a research fellow with the U.S. Business and Industry Council. “Any national industrial complex responsible for such huge trade deficits and consequent national debts is clearly a global laggard, not a global leader.”
Writing in NAM’s Shopfloor blog, Chief Economist Chad Moutray said the increase in manufactured goods exports “indicates that manufacturers continue to find opportunities even with so many headwinds globally.” He noted that year-to-date manufactured goods exports were up 4.7% compared to the same period in 2011. “Our export gains were with most of our major trading partners, with the obvious exception of the eurozone which was essentially flat.”
Since the devastating Great Recession, the U.S. economy has shown gradual improvement in areas such as housing and employment, but the nation’s trade balance remains one area that continues to get worse.
The Commerce Department reported that U.S. imports of $222.8 billion exceeded imports totaling $180.5 billion, resulting in an overall trade deficit of $42.2 billion for October.
The picture for goods was even bleaker. Both imports ($186.6 billion) and exports ($127.5 billion) of goods declined, leaving a deficit of $59.2 billion, up $1.8 billion from September.
The goods deficit with China also continued to climb, up $400 million from September to a record $29.5 billion in October.
“Our trade deficit with China shows no signs of abating,” said Scott Paul, director of the Alliance for American Manufacturing. “I think it’s well past time to shelve the idea of simply doubling exports. Instead, we need a national strategy to dramatically reduce our trade deficit.”
Warning that the U.S. economy is “skating on very thin ice,” James Marple, a senior economist with TD Economics, said trade’s ability to bolster the economy was “limited by a substantial weakening in many of America’s trading partners. This increases the urgency of negotiations in Washington to avoid plunging an already weakened economy off the fiscal cliff.”
