current account deficit: 5.4% of GDP: $2000 per worker per year to finance: 3.3M manufacturing jobs lost ...

December 18, 2007 | While the Bush Administration Dallies, the Crisis Deepens | The Consequences the Trade Deficit | By PETER MORICI

Yesterday, the Commerce Department reported the third quarter current account deficit was $178.5 billion, down from $188.9 billion in the second quarter. The deficit exceeded 5.4 percent of GDP.
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In the third quarter, the United States had a $26.5 surplus on trade in services and a $20.5 billion surplus on income payments. This was hardly enough to offset the massive $199.7 billion deficit on trade in goods, and net unilateral transfers to foreigners equal to $25.8 billion.
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To finance the current account deficit, Americans are borrowing and selling assets at a pace of $700 billion a year. U.S. foreign debt exceeds $6 trillion, and the debt service comes to about $2000 a year for every working American.
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Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3.3 million jobs since 2000. Following the pattern of past economic recoveries, the manufacturing sector should have regained about 2 million of those jobs, especially given the very strong productivity growth accomplished in durable goods and throughout manufacturing.
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Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission