NEW YORK ( TheStreet) -- The trade gap will remain a significant barrier to growth and job creation.
Today, the Commerce Department reported the deficit in international trade in goods and services was $42.9 billion in June, down from $48 billion in May, thanks to lower oil prices and the recent slowdown in U.S. retail sales.
While the trade gap is its smallest since December 2010, both oil prices and retail sales are likely to rebound in the second half of the year, taking the deficit up again. Imported oil and subsidized imports from China account for nearly the entire growth-dragging trade gap.
The economic recovery began five months after President Barack Obama took office, and GDP growth has averaged 2.2%. In October 2009, unemployment peaked at 10%, but has fallen to 8.3% almost entirely because fewer Americans are seeking work.
President Ronald Reagan inherited a similarly troubled economy with unemployment cresting at 10.8% early in his presidency. When he sought reelection, the economy was growing at 6.3%, unemployment was 7.3% and a rising percentage of Americans were seeking work.
Nowadays, economists agree the U.S. economy suffers from too little demand. Consumers are spending and taking on debt, but too many dollars go abroad to pay for Middle East oil and Chinese goods that do not return to buy U.S. exports. Businesses remain pessimistic and don't hire.
President Reagan encouraged the development of natural resources and endured much criticism from environmentalists and academics. While President Obama has talked repeatedly about developing the full range of energy resources, he has bent to their pressure and imposed counterproductive limits on oil production in the Gulf, off the Pacific and Atlantic coasts and in Alaska. Merely replacing domestic oil with imports does little to improve air quality or curb carbon emissions.
These policies are premised on faulty assumptions about the immediate potential of electric cars and unconventional energy sources, and in combination, they make the U.S. much more dependent than necessary on imported oil.
Oil imports could be cut by two-thirds by boosting U.S. oil production to 10 million barrels a day and immediately implementing more feasible solutions like the aggressive use of natural gas in fleet vehicles and more fuel-efficient internal-combustion engines.