Sunday, March 10, 2019

About that trade deficit report

Not sure anyone would want to be the White House messenger who had to tell the boss that the US set a trade deficit record in 2018.  The general public probably found this news surprising, given the multiple-front tariff wars going on.

Economists did not find the record deficit to be surprising at all.  The US economy has been growing more rapidly, meaning everyone has greater spending capacity.  Some of that spending is going to be for imports.

At the same time, Europe and China are slowing down, putting a damper on exports.  Put the two together and, voila, fewer exports + more imports = larger trade deficit.


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