On 20 February Depart-ment of Commerce released 2002 trade statistics showing that U.S. imports of goods exceeded exports by $484.4 billion, which when reduced by $49.1 B in services surplus, leaves a record $435.2 B trade deficit. Trade policy critics, labor unions, and leftist think tanks immediately began beating their drums, sounded quarterly when such data is published, that these deficits mean lost jobs; the bigger the deficit the more jobs are gone. Rubbish.
As described in studies by Dan Griswold of Cato Institute, trade protectionists always estimate job losses due to trade deficits by comparing actual employment with what it would be if the deficit were zero and imported products were U.S. made. That analysis claims that 3 million U.S. jobs were lost in the 1994 to 2000 period. Protectionists ignore the fact that foreign export income is preferentially invested in America and are "guilty of counting the withdrawls and not the deposits in our national balance of payments account," as Griswold puts it. Assumptions that imports directly displace domestic output collides with reality. During that 1994 to 2000 time, civilian employment rose by 12 million to 135.2 million, the unemployment rate fell from 6.1% to 4%, and U.S. manufacturing output rose 40% even though import volume doubled for manufactured goods. In 2001, while U.S. manufacturing fell 4.1% from the prior year, imports of manufactured goods fell 5.4%. There is no correlation or basis to allege that trade deficits or imports result in fewer American jobs.