Dr. Thornton appeared this week on Press TV to discuss the recent jump in the US trade deficit.
A partial transcript:
Press TV: How are we supposed to look at this if this is the largest increase in imports on record?
Thornton: Yes, that is true. The trade deficit of the US versus the rest of world was a shocking figure this month, up 43 percent over the previous month to one of the biggest multi trade deficits since 1996 totaling, as you said, over 51 billion dollars and that is much more than Wall Street expected.
There are two things about this. One is a temporary factor that the dock workers on the West Coast of the United States had been in a dispute and were not working full-time in the previous month. So the trade deficit was lower just because they could not unload the goods at the dock and now the workers are back and so they are rushing to get the backlog out of the way.
But the more permanent factor is that we are not competitive with the rest of the world and the value of the dollar is high and that makes US goods more expensive and that makes foreign goods like from China seem less expensive and so that drives and continues to drive a widening trade deficit of the United States.
Press TV: If we were to look at any relief in that area, how could you get it? Obviously one important fact with overseas production is the cost of labor compared to that of the United States?
Thornton: That is absolutely correct, and it is a catch-22 situation in the United States because while our central bankers have been telling us that we are going to get higher interest rates, that would further strengthen the value of the dollar and that would likely plunge the US into a recession. Here in the United States, as a matter of fact, economists are expecting the first quarter GDP report, which was very anemic here in the United States into negative territories. So it is a very difficult situation for policy makers to find themselves in today.
