U.S. metro regions with the biggest intra-national trade deficits and surpluses

First, the biggest deficits (data for 2010, in billions of dollars):

Washington: -$86 billion

Miami: -$68 billion

San Francisco: -$41 billion

Atlanta: -$35 billion

Baltimore: -$33 billion

…Next, the biggest surpluses:

Los Angeles: +$63 billion

Memphis: +$29 billion

Greensboro: +$18 billion

Corpus Christi: +$18 billion

New Orleans: +$15 billion

Buffalo/Niagara Falls also has a sizable trade surplus as a percent of its gdp.

Which is the better list to be on?  Very often the surplus or deficit has a lot to do with demographics and population changes:

Now, I don’t think many people would consider New Orleans an economic winner. In fact, its population declined 11 percent from 2000 to 2010, partly because of Katrina, but also because of wider problems. And that very decline means that savings generated in New Orleans go elsewhere in search of returns.

That is from Paul Krugman at the NYT.  When it comes to Australia, by the way, one reason the country can run perpetual trade deficits, without inducing a financial crisis, is because of its rapidly growing population.

You might be interested in this Andrea Ferrero piece from the 2010 JME:

This paper investigates the contribution of productivity growth, demographics and fiscal policy in accounting for the evolution of the US external imbalances against industrialized countries during the last three decades. Productivity growth plays a dominant role. Demographics explain a non-negligible and nearly permanent component of the US trade deficit. Furthermore, the international demographic transition is crucial for large US external imbalances to be consistent with the persistent decline of world real interest rates observed in the data. Fiscal policy is of minor importance.

Productivity growth matters because foreign countries wish to invest capital in countries, such as the U.S., which employ it relatively well.

Comments

In 1985 I worked for a woman who told me she had grown up in Washington D.C. "What did your father do?" I asked.

"He owned a factory."

"Really? A factory in Washington D.C.? What did the factory make?"

"Rubber stamps."

That one's too good to not be true. Nice one.

Except that every city in the U.S. above a certain size - think Asheville, NC or Des Moines, Iowa - had a place that made rubber stamps, at least into the 1970s.

Then add in all the state capitals, a number of large university towns, and suddenly (depending on your definition of 'factory'), America has dozens if not hundreds of rubber stamp factories, where custom made stamps with custom made logos/messages were available in a day or two after ordering.

I'm sure that there was more than one rubber stamp factory in the DC metro area in 1978 (not including Baltimore).

To put it differently - one can be quite confident that NYC had a much larger rubber stamp manufacturing base than DC in 1978.

NYC in the 70s? They not only built ‘em, they designed ‘em.

"Except that every city in the U.S. above a certain size – think Asheville, NC or Des Moines, Iowa – had a place that made rubber stamps"

Woosh.

How much of these trade surpluses are due to local manufacturing and how much due to reshipment? Los Angeles has a huge port but also does a lot of light manufacturing. Memphis is the hub for Fed Ex.

Good points raised by SS on the methodology. These kind of stats, like GDP per capita since the Roman times or IQ by country, are somewhat suspect. As TC says, I think these stats are inferred, like productivity is, from residuals ("Very often the surplus or deficit has a lot to do with demographics and population changes"). But Washington DC as a net deficit seems plausible, as people constantly move into DC, are often young, get a few years experience and then move out. Our rentals in the DC area operate on this basis, constant churn, making DC somewhat like a college town for real estate.

Bonus trivia: the Philippines, recently with some of the highest GDP growth rates in the world over a year or two, also maintains a trade deficit. The business model here is to make extremely 'basic' stuff for a growing population. It's rather pathetic in my view (not at all a sophisticated economy) but it makes people rich slowly, and the big cartels that run much of the businesses here very wealthy. If food is a proxy of an economy's sophistication (probably a good proxy) then PH is very basic. E.g., for sweets,"Red Ribbon" bakery (simple chocolate cakes), "Goldilocks" (id), "Dunkin Donuts" or "Krispe Creme" (if you're lucky) but the doughnuts are often stale (not enough volume, quality controls lacking to throw out expensive to make food). Just one example of many I could make. Pizza being another (don't ask, it's awful, TC will tell you more when and if he visits here, though I suspect he'll be more polite and sugar coat it; they love sweet pizza too, Hawaiian being the favorite).

I bet every city with a Costco or Walmart next to the Canadian border has a Trade Surplus with Canada. Bellingham, WA is a spectacular example being Vancouver’s shopping paradise, but it isn’t alone. Visit Kalispel MT sometime, it’s Costco is not because of Glacier NP, or just west of there is Ponderay, Idaho, a suburb of Sandpoint, Idaho whose parking lots are filled with Canadian plates and is a shopping paradise for such populous cities as Creston, Nelson, and Castlegar BC. Not to mention the motels since Canadians have to stay at least overnight to pretend it is not a shopping trip.

Canada’s retail cartels are awful.

We have good friends in Montreal who travel to Plattsburg NY somewhat frequently to take advantage of lower prices there.

Silly numbers, why not reprt household trade deficits?

In any case, take the corner solution and analyze it. should we make or do anything at all since the Krugmanian ideal is that other folks will do all of this for us for free? What could go wrong with a country or planet full of ZMP bearded professors and their fellow travellers?

The issue of "gains from trade" is actually a moral one. You don't gain much by trading, by definition. The non zero-sum part of life is hard work and other things generally described by the bearded professors as inequality.

"You don’t gain much by trading, by definition."

Yes, you gain (exactly how much the other side values your work). So does the other guy. Maybe that is why parasites hate free trade so much.

No sir. Think a bit harder. You echange one thing of equal value for another. There is a surplus if you would happy to pay more. No one is arguing that trade is bad. It's just not the main point.

How do you have division of labor without trade? I am pretty sure that we are massively wealthier now that most people don’t try to grow their own food, make their own clothes, etc.

Again, a straw argument. Trade is fine. It's not the main point.

WOW — you managed to get it exactly wrong. If the two items were valued equally by the parties, then the exchange wouldn’t take place. The trade occurs because each person values the other thing more than what they currently possess.

And that increment goes to precisely zero in an efficent market. Again the point is not that trade is bad - it's good - but its not the main point.

I'll go further and make the claim that when you reduce your manufacturing base to zero you are no longer capable of "free trade". The economists view of lower costs goods supplied by others is a corrupt argument for that reason and many others. Bi-lateral trade of course is not bad. Deficit financed outsourcing of productivity is really bad.

No one has a perfectly efficient market in their own household.

There is so very much wrong with your "understanding" of basic economic concepts

BTW it is just as silly to speak of "free markets" as it is "open borders" . Countries and markets are deservedly regulated legal and moral contructs. And strangely and irritatingly enough straight white males, some in powdered wigs and hose with buckled shoes, have perfected them. As important as markets are, the moral constructs trhat inform them are much more important.

Those who hijack our crucial and determinative moral structures as a platform to diminish them are our most embarassing fellow citizens.

The idea of frictionless markets is fine but it leads to the ideal of young men barking into telephones (now computers), pimping pension funds on each trade and developing the East Village craft cocktail scene. (Yes Jane Streeters I am talking about you). Is that the halmark of a great nation? Probably not.

"When it comes to Australia, by the way, one reason the country can run perpetual trade deficits, without inducing a financial crisis, is because of its rapidly growing population"

Australia has always run current account deficits.

In the 1990's, immigrant volumes were ~ 70K pa. We didn't have any financial crises then.

Last, the only thing Australia can do is run a population growth Ponzi scheme?

UPSHOT: 'C' for knowledge, logic, & explanatory power.

And for hurting our feelings.

@carlospin - read this book (I am) to learn more about AU: Why Australia Prospered: The Shifting Sources of Economic Growth by Ian W. McLean (2013).

Bonus trivia: Australian history is almost always picturesque; indeed, it is so curious and strange, that it is itself the chiefest novelty the country has to offer, and so it pushes the other novelties into second and third place. And it does not read like history, but the most beautiful lies. And all of a fresh new sort, no mouldy old stale ones. — Mark Twain (keep in mind modern Australian history only started in 1770, when Cook discovered it, so Twain speaks truth--RL)

Thanks for the tip, Ray; just ordered it @ the library:

https://press.princeton.edu/titles/9897.html

NB The French & Dutch were here before Cook sailed into Botany Bay [how AUS made its appearance on maps], but they never settled

When you think Krugman could not further be-clown himself, he gives himself bonus points.

Although that is less stupid than his most famous piece de resistance, "If the question is when will markets recover, a first-pass answer is never."

He's an open borders evangelical. Does he explain how ALONE increasing Oz population affects its trade deficits/surpluses. All economics, all economic growth and development are comprised of a great many factors. The human factor is not only numbers/quantity, it's quality - all very complex.

I don't read his stuff. I am already sufficiently stupid. I don't need to clog into my gray matter his ideology, lies, and propaganda.

[Macro] Economics is generally an N=1 look backwards on a fairly complex political economy. It is usually reverse engineered to fit the political biases of the modeler. As such, it is not a generally useful enterprise. You are much better off looking at economic history to see what general principles have worked, and which have not. It is unsurprisingly a sort of morality tale.

". . . reverse engineered to fit the political biases of the modeler." BINGO!

The economist's redcutive low dimensional napkin model of the real world is pretty funny.

Krugman emphasizes population growth/decline as the generators of trade deficits and surpluses, respectively. Thus New Orleans has a large surplus: "its population declined 11 percent from 2000 to 2010, partly because of Katrina, but also because of wider problems. And that very decline means that savings generated in New Orleans go elsewhere in search of returns." Aha, Trump hits the nail on the head but doesn't notice the nail. Krugman: "If anything, much of the time it’s the reverse: fast-growing regions run deficits, stagnating regions run surpluses." Which explains China. Not. Capital seeks the highest rate of return. If one were to follow Piketty, one might conclude that the rate of return (r) is high because it exceeds economic growth (Piketty's thesis for increasing inequality is that r > g). But r hasn't been high, not for a long time. Thus, owners of capital have resorted to one of two strategies to increase r: greater risk and capital flows to other areas (which also includes greater risk). One might ask why r has been depressed. Krugman doesn't. I'm reminded of the geographer who can explain everything based on geography. A few smart economists have focused on low r and sought explanations other than population growth or decline. They are in the minority. Population is to economists as geography is to geographers.

New Orleans might not be a winner, but most the MSAs on the surplus list are growing. If you expand the New Orleans MSA out to Hammond, you also see growth.
And SF probably runs a massive surplus if you look at services.

'Furthermore, the international demographic transition is crucial for large US external imbalances to be consistent with the persistent decline of world real interest rates observed in the data.'

Populations need to die off to keep the budget imbalanced.

Who says so? We do, we tell are politicians that their plots are good, and if their plot w fails, we have a prior agreement to die off. Senator Feinstein just sent me my death notice, the plot is failing.

D.C. is a company town bereft of natural resources or manufacturing. Its only productive capacity is composed of legal services and expense account dependent restaurants. Everything else is imported.

Forget about models and statistics. People get up in the morning and either do productive things or they don't. By far the biggest driver of that is culture. There is plenty of evidence about which cultures succeed and which don't whether "The Acadamy" wants to focus on that or not. And it's not about Guns Germs and Steel. Macro Economists are best highly biased backwards looking model fitting accountants.

Forget about models and statistics. People get up in the morning and either do productive things or they don't. By far the biggest driver of that is culture. There is plenty of evidence about which cultures succeed and which don't whether "The Acadamy" wants to focus on that or not. And it's not about Guns Germs and Steel. Macro Economists are at best highly biased backwards looking model fitting accountants.

Do these figures make sense? San Francisco is negative, but LA is positive. Atlanta is negative, but don't people all over the world use Coca-Cola? Miami is negative; does that include the money laundered for the drug trade?
Would it help our country if we all quit drinking coffee to reduce our deficits with the dreaded coffee-producing nations? Or is Dr. Cowen trying to point out the sillyness of these trade deficit concerns?

Krugman says:

These data only cover goods; they don’t cover either services or income transfers like, say, Social Security receipts, which as we’ll see in a second can make a big difference. So I don’t think I can run any regressions here. But I still think looking at metropolitan trade balances can be enlightening.

Which is why you see SF with a major deficit even though they have companies with hundreds of millions in revenue sitting in SoMa.

There isn't much manufacturing in San Francisco, but Los Angeles county has more manufacturing workers than any other county, so those strike me as plausible. Coca-Cola is headquartered in Atlanta, but presumably very little of the actual manufacturing takes place there (these figures only cover trade in goods, not services). Miami is mostly a center of tourism and retirement, so it makes sense it would be negative.

I think that any time intra-national trade is compared to international trade it is to point out the silliness of such concerns.

I assume the films and music assembled there represent a good part of it.

a good reminder that Trump does not understand (nor does he want to understand) trade deficits...

trade deficits means being able to have dinner out instead of growing/cooking your own food.

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