And, by the way, our economy is growing at about 3 percent right now, and has grown from between 1 and four percent every quarter for the past two years (since the Clinton recession) and unemplyment has fallen for the past two quarters (It's now at 6%; the natrual rate of unemployment is around 5%, but it is a lagging indicator)
Record U.S. Trade Deficit In '02The Associated Press
February 20, 2003, 9:28 AM EST
The United States recorded a $435.2 billion trade deficit for 2002, the largest imbalance in history, as the weak global economy set back American exports while imports of autos and other consumer goods were hitting all-time highs.
In other economic news, the Labor Department reported Thursday that inflation at the wholesale level shot up by 1.6 percent in January, the biggest increase in 13 years, led by a sharp 4.8 percent rise in energy costs.
Even though the surge was concentrated in energy, prices of other items such as new cars showed big advances as well and the overall increase was certain to raise concerns about whether inflation, which has been well-behaved for years, was threatening to get out of control. The government will report on January consumer prices on Friday.
In a third report, the government said that the number of newly laid off workers filing unemployment claims jumped to a seven-week high of 402,000 last week, up by 21,000 from the previous week, showing that the labor market is still struggling with an uneven economic recovery.
The trade report showed that even in agricultural products, normally a U.S. bulwark, Americans bought more imported wine, cheese and other foods than American farmers were able to sell abroad — resulting in only the second U.S. trade deficit in farm goods on record.
The Commerce Department reported Thursday that the deficit for all of last year was up 21.5 percent from the $358.3 billion trade gap recorded in 2001 and surpassed the old record deficit of $378.7 billion set in 2000.
By country, the United States ran up the largest trade gap with China, a deficit of $103.1 billion, marking the third straight year that the United States has recorded its largest trade deficit with that nation. It pushed the former front-runner in this category, Japan, into second place.
In addition to the record for all of 2002, the United States set a new monthly high of $44.2 billion in December, up 10.5 percent from the previous record set in November of $40.0 billion.
Opponents of President Bush’s trade policies contend that the huge trade deficits represent the loss of millions of manufacturing jobs as U.S. companies have been battered by what the critics say is unfair competition from low-wage countries that stifle labor rights and have lax environmental protections.
However, the administration contends that it is pursuing the correct procedure in trying to cut global trade deals that will lower high barriers in other countries in a way that boosts American exports.
American manufacturing companies have been lobbying for the Bush administration to drop its support for a strong dollar policy, arguing that an overpriced dollar has made their goods noncompetitive in foreign markets while opening them to a flood of competition from cheaper priced imports.
Treasury Secretary John Snow, who was meeting with British finance officials on Thursday on his way to a weekend meeting in Paris of America’s major economic allies, insisted during his Senate confirmation hearing that the administration intends to make no change in its strong dollar policy. A strong U.S. dollar makes investments in U.S. stocks and bonds more attractive to foreigners.
For 2002, exports of goods and services fell 2.5 percent to $973 billion, marking the second consecutive annual decline, as American exporters found it increasingly difficult to sell overseas. This reflected a spreading global economic slowdown and the strong dollar.
American manufacturers were the hardest hit sector of the economy during the 2001 recession with a loss of nearly 2 million workers. While the economy began a recovery in 2002, the progress has been uneven and so far it has not resulted in a rebound in hiring.
American imports, which fell 6 percent in 2001, reflecting the U.S. recession, staged a rebound in 2002, rising by 3.8 percent to $1.41 trillion. That, however, was still below the all-time high of $1.44 trillion set in 2000.
But in individual categories, imports of autos and auto parts set a record high $203.9 billion and imports of other consumer goods, a category that includes everything from clothes to televisions and toys, also hit a record high of $307.7 billion last year.
Imports of oil totaled $103.6 billion last year, basically unchanged from the level in 2001.
After China, deficits with other countries included imbalances of $$70.1 billion with Japan; $49.8 billion with Canada and $37.2 billion with Mexico.
On the export side, manufactured goods suffered a setback but sales of American farm products managed to eke out a tiny 0.3 percent increase to $49.54 billion last year over the 2001 level.
However, imports of farm products rose a much faster 6.6 percent to $49.72 billion, representing in a deficit in farm trade of $176 million, the second such deficit in history. Farm imports topped exports in 1986 as well.
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Data Paints Grim PictureBy James Toedtman
Chief Economic Correspondent
February 21, 2003
Washington -- While pressing his campaign against Saddam Hussein, President George W. Bush assured a flag-waving crowd near Atlanta Thursday that he could mend the nation's slumping economy if Congress would pass his proposed $695 billion tax cut.
The president, however, got no comfort from the latest round of economic statistics as he continued his two-track strategy of galvanizing the country for armed conflict while attending to the national economic recovery that has lost much of its steam since the start of the year.
Wall Street and economic data released Thursday painted a glum picture. The New York Conference Board's Index of Leading Indicators fell after increasing each of the past three straight months, the number of people seeking unemployment benefits jumped, the balance of trade widened unexpectedly, and the threat of inflation was raised by a 1 percent growth in producer prices, the sharpest increase since 1990.
In New York, the statistics are just as bleak, with a year-to-year loss of 3,700 jobs on Long Island and a year-to-year decline in retail sales in both Nassau and Suffolk, according to Pearl Kamer, chief economist for the Long Island Association. New York City faces even greater challenges with "very significant” job losses in the financial, telecommunications and government sectors, she said.
In Georgia, Bush told a crowd of 3,000 enthusiasts in a high school gymnasium in Kennesaw that his stimulus package would "help turn this recovery into lasting prosperity.”<br>
But there was little sign of the economic recovery as the president traveled the 30 miles from Atlanta to Kennesaw. On arrival the president was greeted by a local newspaper poll that found only 24 percent of the Georgia public support his handling of the economy.
Bush was heartened, however, when Sen. Zell Miller (D-Ga.) introduced the president and announced support for the Bush tax plan. Miller was one of 12 Democrats who voted for Bush's $1.35 trillion, 10-year tax cut two years ago. But that was when a 10-year, $5.6 trillion surplus was forecast for the federal budget. Bush's budget office now forecasts a $3.7 billion deficit this year, a $304 billion deficit next year and annual deficits for the next decade.
Other Democrats who supported the tax plan now say the latest proposal is too large. They have been joined by worried Republicans, which leaves the outcome uncertain in the Senate, where Republicans have a two-vote majority.
Senate Democratic Leader Tom Daschle (D-S.D.) quickly dismissed the significance of Miller's endorsement: "This plan is still wrong for the country, and it is still dead on arrival.”<br>
Bush's proposal would advance tax cuts already approved that do not go into effect until next year and raise the per child tax credit from the current $600 to $1,000. The most expensive portion of the plan would end taxation of dividend income for the 34.1 million who receive dividends.
This was the president's seventh speech rallying support for the tax plan. The aggressive push of Commerce Secretary Don Evans and Treasury Secretary John Snow has been matched by business mail and telephone and e-mail campaigns.
But the cheerleading has put the president squarely opposite Federal Reserve Chairman Alan Greenspan, who told Congress last week that the tax cut wasn't stimulative and probably wouldn't be necessary anyway. Instead, he said that economic activity isn't likely to pick up until geopolitical concerns over a possible war with Iraq are resolved.
Indeed, the Conference Board's leading economic indicators, a reliable predictor of future economic activity, fell by .2 percent after three consecutive months of growth and federal statistics showed that 402,000 workers filed new claims for state unemployment benefits, the highest level in seven weeks, suggesting companies are waiting for the economy to pick up before hiring.
What's more the trade deficit blew out to $435.2 billion for 2002, the government reported -- the weak global economy causing exports to decline for a second straight year.