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  • Trade Deficit Reality Check

    Consider these recent print headlines: Economic Growth Slowed by Trade Gap; Economic Growth Cut Sharply Due to Trade Gap; and Economy Slows to 1.6 Percent as Trade Gap Widens.

    The people who wrote those headlines and the corresponding articles must have awfully short memories. Last year, the trade deficit fell by 46 percent. Imports declined by 23 percent. Analysts who believe trade deficits and imports are a drag on the economy should have been thrilled. But here is the rest of the story: Real GDP fell by 2.6 percent and the unemployment rate increased by 60 percent.

    Anyone paying attention, however, shouldn’t have been surprised. A weak economy leaves Americans with less money to spend on imports, and as a result the trade deficit tends to shrink.

    These reports lamenting the recent surge in U.S. imports are misguided. They encourage protectionist economic policies that would further damage our already reeling economy. They also allow politicians to blame imports for our economic problems, instead of the massive growth of government spending and regulations that are dragging our economy down.

    Americans should hope for a big surge in imports in the near future. A fast-growing economy would give Americans more money to spend on imports and that—note to headline writers—would obviously be a very good thing.

    Posted in International [slideshow_deploy]

    2 Responses to Trade Deficit Reality Check

    1. Billie says:

      There is absolutely no excuse for this incompetence.

    2. Michael Guy says:

      Lets see, money leaves the country, factories either go bankrupt or move to foreign nations to manufacture goods without the onerous rules, regulations and taxation imposed by democrats. So we have a declining industrial tax base, declining numbers of American workers with decent pay and benefits. to compound this problem foreign countries lend back some of their revenues to America under stringent terms, interest, conditions and pledges of collateral assets. So what is the benefit of free trade? I believe we need to go back to Hamiltonian nationalistic economic policy.

      I think some of the democrats got it right this time, remember Bill Clinton and his democrat majority gave us NAFTA and other deleterious trade treaties.

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