Economic Growth Slows to a Crawl

Last Updated on Friday, 29 April 2011 02:45 Friday, 29 April 2011 02:43

Written by Bailout Main Street Now

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Economic Growth Slows to a Crawl

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In the first quarter of 2011, U.S. gross domestic product (GDP) only increased by 1.8 percent, vastly down from the 3.1 percent of growth in the last quarter of 2010.

In economic recoveries, that measure is supposed to go up much more quickly, reinforcing the increasingly held view that the U.S. economy is as stagnant as ever. Many analysts blame high gas prices, higher overall inflation and a 'double-dip' in housing prices for this problem.

All are very valid reasons. Investment in homes dropped 4.1 percent, while investment in stores and factories plunged 29 percent. Consumer prices are up by 3.8 percent compared to last year (with gas and food up more than that). A surge in imports due to higher prices clipped 0.8 percent off GDP, according to the Commerce Department.

And that is the chief problem. America's importation of goods is costing us jobs and wealth. Thanks to our “free” trade agreements, the amount of imports have surged into this country, while exports have increased at a much slower pace, creating monster trade deficits (when a nation imports more than it exports).

Because of deals such as NAFTA and organizations such as the WTO, America has lost more than 5.5 million jobs in the past decade in the manufacturing sector alone, according to the Economic Policy Institute. Jobs are essential to any recovery, making the term “jobless recovery” an oxymoron. Without addressing the hole in the bottom of the boat that is our trade deficit, America's ship will sink in a wave of imports.

Ending the destruction of domestic manufacturing from mercantilist foreign rivals is critical to creating greater employment and thus economic growth in this nation. As long as our heads remain buried in the sand to the real issues confronting our economy, it will be impossible to correct the problem and get America back on track.

Source: Economy in Crisis

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