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Wednesday, July 13, 2011

The Trade Deficit Jumps

Dean Baker brings us the bad news the media mostly overlooked:

The Trade Deficit Jumps While the Politicians Play Debt Ceiling Poker, by Dean Baker: The Commerce Department reported that the trade deficit jumped in May to $50.2 billion from $43.6 billion in April. The monthly data are erratic, but this is definitely bad news. This means that growth in the U.S. economy is likely to be very weak in the second quarter. (Measured in constant dollars, the deficit increased by $3.9 billion.) It does not look like trade is about to become a major driver of growth and jobs.
This is also bad news for fans of income accounting. If we have a trade deficit, then national savings must be negative. That means either or both negative private savings or negative public savings (e.g. budget deficits). That's the rules -- there is no way around this one.
But this one didn't get much attention in the media. ...

    Posted by on Wednesday, July 13, 2011 at 03:06 PM in Economics, International Finance, International Trade | Permalink  Comments (13)


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