Oct 7, 2017 Employment Explosion
June 26, 2017 Why's the FED Panicking?
May 25, 2017 LFPR anyone?
Apr 26, 2017 What's up with the FED?
March 10, 2017 Feb Employment Situation
Oct 10, 2016 Tax Burden
Aug 1, 2016 Here Comes the Debt
June 26, 2016 Moribund US Economy
June 16 2016 Labor Update
Mar 10, 2016 Spring Renewal for Labor Markets?
Feb 21, 2016 GDP Gap
Feb 16, 2016 FED and Monetary Policy
Jan 19, 2016 Employment Gap Age Groups LFPR
Jan 10, 2016 A look at the Employment Situation
Dec 30, 2015 Fed Funds Rate up 25 Basis points...so what?
Dec 15, 2015 Fed Funds on the rise? Has Yellen 'Fell-in'?
Oct 15, 2015 Labor Markets Seven years of misery
Oct 6, 2015 Sept: Horrible Month for Labor
Sept 30, 2015 The FED: Interest Rate Angst
Sept 11, 2015 FED on the Monetary Policy Front
July 31, 2015 Trade and Foreign Exchange Rates
July 20, 2015 Economic Growth?
July 10, 2015 Labor Picture by Age Group
July 2, 2015 Disastrous Month in Labor Rpt
June 19, 2015 Minimum Wage - Income Distribution
Jun 5, 2015 Encouraged Worker Effect
May 8, 2015 Updated Employment Situation for April
May 4, 2015 Languishing Labor Markets
Apr 7, 2015 LFPR Doldrums on the Labor Front
March 8, 2015 Less than Zero Interest Rates - Trade War
2014 Articles
2013 Articles
2012 Articles
2011 & 2010 Articles
Dec 23, 2011 Revisionist History Depression
Dec 10, 2011 Depression & Now Part 1
Dec 5, 2011 Lies, Damned Lies, Statistics
Nov 16, 2011 Taxes Part 2
Nov 8, 2011 Taxes Pt 1
Nov 1, 2011 Demographics
Oct 12, 2011 Fed-FOMC
Oct 6, 2011 Fed's Operation Twist
Sep 30, 2011 What Price Bailouts?!
Sep 9, 2011 Trade Deficit - States
Sept 3, 2011 Unemployment Ongoing Challenge
August 22, 2011 Restricting Oil Supply
August 11, 2011 Credit Rating-Taxes
August 8, 2011 QE3? What to do?
Aug 5, 2011 Employment Update
August 1, 2011 Competitive Free Mkt Capitalism
July 26, 2011 Cradle of Democracy
July 16, 2011 Capital Ratios
July 10, 2011 Unemployment Again
July 1, 2011 QE2 Over-Apres Moi, le Deluge
June 11, 2011 Unemployment
June 8, 2011 Net Worth Collapse
May 18 2011 Credit Collapse '08-'10
May 15, 2011 Fed Miracle-Mayhem
May 10, 2011 Unemployment
Mar 30, 2011 Puppet Show
Mar 18, 2011 Locked-in-Effect
Mar 10, 2011 Bummer Days
Feb 12 2011 Inflation by Decontenting
Feb 6 2011 Unemployment
Jan 14 2011 Money Supply
Jan 12 2011 Trade Deficit
Jan 6 2011 Printing Press Myth
Dec 18, 2010 College Pricing
Dec 7 2010 Debt & Deficits
Dec 2, 2010 J-Laffer Curve
Sep 24 2010 Competition
Sept 23 2010 Trade Deficit China
About us
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Definitions & Miscellaneous

Economic Newsletter for the New Millennium

September 9, 2011

Donald R. Byrne, Ph.D.

Associate Editor
Edward T. Derbin, MA, MBA

Download Current Blog

More Bad News Sept 2011.pdf


The trade deficit occurs when we import more goods and services from other nations than we export to them.  The technical name for the trade balance is the Balance on Merchandise and services Accounts.

Deficits, as we are experiencing, depress the overall level of economic activity and make recovery even more difficult.  A trade surplus would stimulate the economy.  Why so?

Imports depress the level of economic activity because they demand other nations’ goods and services thus lessening the demand for domestically produced merchandise (also called goods) and services.  Exports on the other hand do the opposite, they add to the domestic demand and increase total demand (the more formal name for total demand in macroeconomic theory is aggregate demand) for domestically produced goods or merchandise and services.  Since currently we have been experiencing a trade deficit, an excess of imports over exports, our international trade position depresses the level of economic activity and slows the recovery and could help cause a ‘double dip‘ recession.  The Great Depression of the 1930s experienced such a double dip in 1937.

Imports are not all bad.  If we import those goods and services in which we have what economists call a comparative disadvantage and export those in which we have a comparative advantage, we can experience a higher standard of living on average or per capita basis.  However, policies of nations often favor industries in which they have a comparative disadvantage and prevent the importation of those goods and services as their trading partners do the same thing.  Political pressures and a variety of economic motives cause these inefficient aberrations thus lowering the average or per capita standard of lining of a nation.  Protective tariffs on imports, export subsidies and intervening in foreign exchange markets, are some of the policies resulting in ‘UNFAIR TRADE’. 

Over several centuries, as small political units were combining into nations, an economic doctrine developed in conjunction with nation building.  It was called mercantilism in England.  In France a similar doctrine was called Colbertism and in Germany, Cameralism.  A surplus in the trade or merchandise and services balance in those days was called a favorable trade balance.  The excess of exports over imports often meant that gold or gold coins were the means of settling the balance with the gold flowing into the nation with the surplus.  This was a means of financing the building up of the strength of the budding nation as it could buy mercenaries, such as Hessians for England as they conquered and occupied colonial America.   

Today, a similar modernized doctrine version of these policies exists in nations like China and Korea as well as Japan and Germany in the post-WWII era.  For want of a beer name it is usually referred to as Neo-mercantilism.  The goal is to keep a taught economy at home and export any surpluses products not consumed domestically.  China has done this by pegging their currency well below the equilibrium level.  In the Post WWII era, the IMF fixed exchange rate system, included pegs for the Japanese Yen and German Mark at dollar prices well below their equilibrium levels.  The resulting trade deficits of Japan and Germany with the U.S. were a major cause of the “miracles” of returning these economies to peacetime expansion. 

From our Newsletter…

2010 Volume Issue 1

September 23, 2010

HERE WE GO AGAIN - The broken CD (record) routine…before it was Japan and Germany eating our lunch, now it is China


US Total Balance of Goods January - June 2011.jpg


US Total Exports January - June 2011.jpg

US Total Imports January - June 2011.jpg

For a more in depth analysis, please review our past articles on this topic in our previous postings…

Why 25+ Years of Trade Deficits?

A tale of High Real Risk-adjusted Interest Rates and the Appreciating/Depreciating Dollar (Jan 12, 2011)


U.S. Balance of Payments and the Greatest Puppet Show on Earth: China; the Oil Cartel(s); and Energy and the Environment (March 30, 2011) 


The Laffer Curve and the J-Curve are Analytically like Two Peas in a Pod (December 2, 2010)


U.S. Trade Deficit: Good, Bad, or Irrelevant? (October 10, 2003)


We now drill down on the top ten states that have contributed the most to the Balance of Goods (or Merchandise) portion of the trade deficit. 

The Balance on Goods or Merchandise Account is considered below.  It is part of the Trade or Merchandise and Services Balance along with the Services Balance.  The Services Account is a very confusing mixture and has a variety of so called ‘drivers’.  The Services Account includes such things as transportation and tourism and the repatriation of income on past international investments (not the investments themselves as they appear in the Long-term and Short-term Capital Accounts). 


Top Ten States by Goods Deficits January - June 2011.jpg

US (Top Ten States with Goods Deficit) Exports January - June 2011.jpg


US (Top Ten States with Goods Deficit) Imports January - June 2011.jpg

Drilling down even further on California, New Jersey and Texas for the 2010 calendar year, we can see some details on the composition of the exports and imports. 



California Top Ten Exports by Commodity Code 2010.jpg

California Top Ten Imports by Commodity Code 2010.jpg

California Goods Balance by Country 2010.jpg


California Exports by Country 2010.jpg


California Imports by Country 2010.jpg



New Jersey Top Ten Exports by Commodity Code 2010.jpg

New Jersey Top Ten Imports by Commodity Code 2010.jpg


New Jersey Exports by Country 2010.jpg


New Jersey Imports by Country 2010.jpg

New Jersey Goods Balance by Country 2010.jpg


Texas Top Ten Exports by Commodity Code 2010.jpg


Texas Top Ten Imports by Commodity Code 2010.jpg


Texas Exports by Country 2010.jpg


Texas Imports by Country 2010.jpg


Texas Goods Balance by Country 2010.jpg

Be sure to check out the site in coming days for data on: 
Illinois, Michigan, Pennsylvania, New York, Georgia, Louisiana and Tennessee