America’s Record Trade Deficit: A Symbol Of Economic Strength
- Topics:
- Import Export
- Tags:
- America,
- Cato Institute,
- Finance,
- Investment,
- U.S.
- Source:
- Cato Institute
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Overview: America’s chronic trade deficit continues to set new records, both for its sheer size in nominal terms and for its share of an expanding gross national product. The record deficit is fueling worry that it could hurt U.S. industry, destroy jobs, burden future generations, and cause the current economic expansion to end in a “hard landing.” The report by Trade Deficit Review Commission reflected the views of a sharply divided commission, with Democratic-appointed members warning of the dangers of the deficit while Republican-appointed members emphasized its more benign nature. Due to the link between trade deficits and rising investment, larger trade deficits are typically accompanied by improving economic conditions. America’s annual trade deficits are sustainable as long as the United States remains a safe and profitable destination for the world’s savings. The best policy response for the new administration and Congress would be to ignore the U.S. trade deficit as a target of policy and concentrate instead on maintaining a strong and open domestic economy that welcomes foreign investment.
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Format: PDF | Size: 180KB | Date: Feb 2001 | Pages: 20
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