Trade Deficit Remains Barrier to Recovery

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) -- Friday, the Commerce Department is expected to report the deficit on international trade in goods and services was $48.4 billion in January, only slightly changed from December.

The $580 billion annual trade deficit is the most significant barrier to jobs creation and lowering unemployment, and oil and consumer goods from China account for virtually the entire problem.

Economists agree, the pace of economic recovery has disappointed, because of too little demand for what Americans make. Consumers are spending again -- the process of winding down consumer debt that followed the Great Recession ended last April; however, every dollar that goes abroad to purchase oil or Chinese consumer goods, and does not return to purchase U.S. exports, is lost domestic demand that could be creating American jobs.


Jobs Creation

Also on Friday, the Labor Department is expected to report the economy created 204,000 jobs in February; 367,000 jobs must be added each month for the next 36 months to bring unemployment down to 6%. With federal and state governments cutting payrolls, the private sector must add about 390,000 jobs per month to accomplish this goal. Growth of at least 4% to 5% a year is needed to accomplish that.

>>Also see: Jobs Report Likely To Be a Disappointment

Unemployment has fallen from 10% in October 2009 largely because working aged adults are dropping out of the labor force -- they are neither employed nor seeking work. The jobless rate has fallen to 8.3% because the percentage of adults participating in the labor force -- the employed and those unemployed but making some effort to find work -- fell from 65% to 63.7% percent. The percentage of adults employed has not changed -- it's stuck at 58.5%.

Simply, during this recovery, the most effective jobs creation program has been to convince more adults that they don't want a job or it is futile to look for a decent position, and simply quit looking -- that phenomenon has accounted for 75% of the reduction in the unemployment rate over the past 27 months.

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