U.S. Trade “Deficit” Plunges–Can We Bury This Myth?

Today the Commerce Department reported the 1st quarter Current Account deficit (aka Trade Deficit) plunged by 34.5% from the previous quarter.  It’s the lowest level since 2001, which happens to be the last time the nation was in recession.

See the core article “When Bad News Is Good: Exploring the Trade Deficit Myth” for an explantion of why we shouldn’t worry about the trade “deficit.”  It’s not a deficit at all, and is nearly always larger when the economy is strong.  On the other hand, maybe the US can swing to “surplus” if the economy tanks further.  Given the choice, I’d prefer a huge trade “deficit” with a vibrant economy any time.

Leave a Reply