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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
TheStreet) -- Thursday, the Commerce Department is expected to report the deficit on international trade in goods and services was $48 billion in June. The trade deficit is the most significant barrier to jobs creation and growth in the U.S. economy.
Simply, the U.S. economy suffers from too little demand for what Americans make. Every dollar that goes abroad to purchase oil or Chinese consumer goods that does not return to purchase exports is lost purchasing power that could be creating jobs. Halving the nearly $600 billion annual trade deficit would create at least 5 million jobs.
Oil and Chinese imports account for virtually the entire trade deficit. The failure of both the Bush and Obama administrations to develop abundant domestic oil and gas resources and address subsidized Chinese imports are major barriers to pulling down unemployment to acceptable levels.
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The economy added only 117,000 jobs in June; 386,000 jobs must be added each month for the next 36 months to bring unemployment down to 6%. With federal and state government cutting payrolls, the private sector must add about 410,000 per month to accomplish this goal.
Too many dollars spent by Americans go abroad to purchase Middle East oil and Chinese consumer goods that do not return to buy U.S. exports. This leaves U.S. businesses with too little demand to justify new investments and hiring, too many Americans jobless and wages stagnant, and state and municipal governments with chronic budget woes.
The first half of 2011, GDP growth has averaged about 0.8%, well below the 3% needed just to keep up with productivity and labor force growth and keep unemployment from rising.
In 2010, consumer spending, business technology and auto sales added strongly to demand and growth, and exports have done quite well. However in 2011, the soaring cost of imported oil and subsidized Chinese manufactures into U.S. markets pushed up the trade deficit and offset those positive trends. Now consumer pessimism is pushing down retail sales and home prices and discouraging new home construction and business investment.