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Good News: Reporters Link Bigger Trade Deficit to Stronger Economy
Posted By Bryan Riley On July 3, 2013 @ 1:26 pm In Economics | Comments Disabled
The government just announced that the trade deficit for May increased by $400 million.
Usually, the media report announcements of bigger trade deficits as bad news, accompanied by mistaken assertions that trade deficits are a drag on the economy. But this time, some reporters got it right.
According to Reuters : “In another sign of improving domestic economic conditions, the U.S. trade deficit widened sharply in May, as stronger U.S. demand pulled in more imports, a report from the Commerce Department showed.”
And according to the Associated Press : “But economists noted that the wider deficit does show growth in the United States remains stronger than most other nations. That growth has helped fuel more spending by consumers on domestic and imported goods.”
Recent reports  on Japan’s trade deficit made a similar connection: “Economists told CNBC that they expected Japan’s trade deficit to widen in May, adding that they forecast a surge in imports to reflect a marked improvement for the world’s third largest economy.”
There is no evidence of a link between wider trade gaps and restrained growth. In fact, Heritage Foundation research demonstrates  that the U.S. economy has grown faster in years when the trade deficit increases than when the trade deficit declines. The fact that reporters are beginning to get the story right is good news.
Article printed from The Foundry: Conservative Policy News Blog from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2013/07/03/good-news-reporters-link-bigger-trade-deficit-to-stronger-economy/
URLs in this post:
 Image: http://blog.heritage.org/wp-content/uploads/CargoShip_130308.jpg
 Reuters: http://www.cnbc.com/id/100862705
 Associated Press: http://www.usnews.com/news/business/articles/2013/07/03/us-trade-deficit-widens-to-45-billion-in-may
 reports: http://www.cnbc.com/id/100823037
 demonstrates: http://blog.heritage.org/2013/03/08/reporters-tell-the-truth-a-trade-deficit-is-not-bad/
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