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U.S. Trade Deficit Improves

Posted By Bryan Riley On July 14, 2010 @ 7:00 pm In International | Comments Disabled

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On July 13, the government released international trade statistics for the first five months of the year showing a growing trade deficit—and almost no one got the story right. Here are some examples:

Trade Deficit Gets even Worse [2],” announced the July 13, 2010 Yahoo! Finance headline.

Trade Deficit’s Increase Seen as an Unwelcome Surprise [3],” reported the Sacramento Bee.

Surprise Jump in Trade Deficit Worries Economists [4],” warned the Los Angeles Times.

U.S. Trade Data for May Presented yet More Unfortunate News for the U.S. Economy [5],” reported The Wall Street Journal.

The gloom-and-doom reports resulting from the government’s trade data all had one thing in common: they got the story absolutely backwards.

The trade data showed good news on the export front, with U.S. exports up 17.7 percent for the first five months of the year compared to 2009.

The data also showed good news on the import front, with imports for the first five months of the year up 21.4 percent from last year. As The Heritage Foundation has pointed out in the past [6], that’s good news because a growing U.S. economy leaves Americans with more money to spend on imports. Fewer imports would have been an unmistakable sign of a weak U.S. economy.

Perhaps the best news is that the U.S. trade deficit for the first five months of the year widened. That’s “widened,” not “worsened.” If anything, a growing trade deficit is an improving trade deficit. That’s because historically, when U.S. trade deficits get bigger, U.S. unemployment rates decline and GDP increases.

When the government releases its trade statistics next month, maybe someone will get the story right for a change.


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URL to article: http://blog.heritage.org/2010/07/14/u-s-trade-deficit-improves/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/Cargo_Cranes0902041.jpg

[2] Trade Deficit Gets even Worse: http://finance.yahoo.com/news/Trade-Deficit-Gets-Even-zacks-1427147838.html?x=0

[3] Trade Deficit’s Increase Seen as an Unwelcome Surprise: http://www.sacbee.com/2010/07/13/2887505/trade-deficits-increase-seen-as.html

[4] Surprise Jump in Trade Deficit Worries Economists: http://www.latimes.com/business/la-fi-econ-trade-20100714,0,6591387.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fmostviewed+%28L.A.+Times+-+Most+Viewed+Stories%29

[5] U.S. Trade Data for May Presented yet More Unfortunate News for the U.S. Economy: http://blogs.wsj.com/economics/2010/07/13/trade-data-lead-to-cut-in-second-quarter-gdp-forecasts/

[6] has pointed out in the past: http://blog.heritage.org../2010/01/12/growing-trade-deficit-good-news-for-u-s-economy/

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