Calling TPP Foes 'Simplistic,' USA Today Simply Gets the Numbers Wrong

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Calling TPP Foes 'Simplistic,' USA Today Simply Gets the Numbers Wrong

AFGE joined other labor organizations to oppose the Trans Pacific Partnership Trade deal in a rally outside of the Capitol in May 2014. (Photo: AFGE/flickr/cc)

USA Today (5/3/15) got its numbers seriously wrong in pushing the case for the Trans-Pacific Partnership (TPP). Its editorial, headlined  “New Trade Deal Triggers Angry, Fact-Free Uproar,” told readers:

Democrats, however, are wedded to unions who blame trade, and trade agreements, for the decline in manufacturing jobs.

Theirs is a simplistic view that ignores the fact that manufacturing output has nearly doubled since the late 1990s, showing that technology is the real job killer.

It’s USA Today, not the unions, who are being simplistic here. The data they are relying on refers to gross output. This would include the full value of a car assembled in the United States, even if the engine, transmission and the other major components are imported.

It also doesn’t adjust for inflation. If USA Today used the correct table, it would find that real value added in manufacturing hasn’t “nearly doubled”–it’s risen by a bit less than 41.0 percent since 1997, compared to growth of 45.8 percent for the economy as a whole.

The story here is a one of very basic macroeconomics. The $500 billion annual trade deficit ($600 billion at an annual rate in March) implies a loss of demand of almost 3.0 percent of GDP. In the context of an economy that is below full employment, this has the same impact on the economy as if consumers took $500 billion every year and stuffed it under their mattress instead of spending it. USA Today might try working on its numbers and economics a bit before calling people names.

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