Trade Deficit Reality Check

Bryan Riley / August 30, 2010

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. (more…)