US imports outpacing exports. Where are all the jobs?

[NNN0LHI]

http://www.businessweek.com/magazine/content/10_20/b4178011467068.htm

Global Economics May 5, 2010, 11:01PM EST

The U.S. Trade Gap Won't Go Away

After shrinking in the recession, it's back up, with imports outpacing exports—and it "doesn't seem to be a problem that's self-correcting"

The U.S. trade deficit shrank like a puddle in the hot sun in 2008 and 2009 as appetite for imports melted in the recession and Asian export markets grew. With the U.S. economy now improving, the gap is widening again, dashing hopes that the U.S. is anywhere close to rebalancing trade with the rest of the world.

On Apr. 30 the Commerce Dept. announced that the economy grew at an estimated annual rate of 3.2 percent in the first three months of the year, propelled by stronger consumer spending and business investment. The bad news is that a lot of that consumption and investment went for imports. While exports grew at a 5.8 percent rate, imports grew at an annual rate of 8.9 percent. Overall, the trade deficit nicked 0.6 percentage points from the growth rate.

The broadest measure of the trade deficit peaked in 2006 at just over $800 billion, or 6 percent of gross domestic product. (These numbers describe the current account, which includes trade in goods and services as well as cross-border investment income.) By 2009 it was a little more than $400 billion, just under 3 percent of GDP. But by the second half of 2009, the gap had already come off its bottom—rising 18 percent from the second to the fourth quarter. "We would expect to grow a little bit faster than the overall economy," says Ethan Harris, chief economist at Bank of America Merrill Lynch (BAC).

The quick resurgence shows that the recession didn't reduce U.S. overdependence on imports; by permanently closing many factories, it probably helped hollow out the U.S. economy, making it harder to balance trade. As General Electric (GE) Chief Executive Officer Jeffrey Immelt said in a recent speech, China is likely to surpass the U.S. in manufacturing output in the next few years. "In Reagan's time, America was the world's biggest exporter by far," said Immelt. "Today, we're fourth."

[melm00se]

1. it's because the dollar is strengthening

(in comparison) to other currencies and when that happens goods flow from the land of the weaker currency to the land of the stronger currency.

[Javaman]

2. Because we are now importing our own goods.

If only they were actually made here...