NEW YORK ( TheStreet ) -- Friday, economists expect the Labor Department to report the economy added 140,000 jobs in December, barely enough to hold unemployment steady at about 9.8% and far less than should be expected 18 months into an economic recovery.

The President's $800 billion stimulus package gave the economy a lift and additional tax cuts in 2011 will help too, but those did not address structural problems holding back jobs creation --principal among those is the huge trade deficit.

Since July 2009, spending by consumers, businesses, and federal and state governments has increased at a 3.8% annual pace, but imports and the trade deficit have jumped 17 and 37%. Simply, too many stimulus dollars are being spent on goods from China, and too few of those dollars return to purchase U.S. exports.

The growing trade deficit is a tax on domestic demand that offsets much of the benefits of stimulus spending and tax cuts. Consequently, the U.S. economy is expanding at a 2.9% annual pace, which is not enough to dent unemployment.

Since December 2010, the private sector has added 106,000 jobs per month, but most of those have been in government-subsidized health care and social services, and temporary business services. Netting those out, core private sector jobs creation has been a paltry 51,000 per month -- that comes to 16 per county as compared to more than 5,000 job seekers per county.

Coming out of a recession, temporary jobs appear first, but 18 months into the expansion the pace of permanent, non-government subsidized jobs creation should be accelerating. Instead, core private sector jobs fell 13,000 in November. It will increase in December, but monthly data is erratic, and the November and December figures should be evaluated together.

By the end of 2013, about 13 million private sector jobs must be added to bring unemployment down to 6%, and current policies are not creating conditions for businesses to hire 350,000 workers each month.

The President and new Republican majority in the House agree the budget deficit must be slashed, but whether accomplished through higher taxes or less spending, a significantly smaller budget deficit will reduce domestic demand, kill the economy recovery and push unemployment well above 10%, unless the trade deficit is slashed by a like amount.

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