Economist Mike Walden: A Widening Trade Deficit

The trade deficit – which measures the difference between the value of products and services the country imports against the value of products and services our nation exports – widened last year.  Why did this happen?

  1. Instructive to look at our world trade in three parts – in petroleum, in services, and in goods
  2. Biggest change has been in petroleum, as recently as 10 years ago we were a big importer, and oil was a big driver of the trade deficit – now we are almost at a zero trade balance for oil
  3. Trade in services has always been a plus for the US in world trade – and in last decade has been more so, with trade surplus in services more than doubling
  4. Big culprit in trade deficit is in goods (products) – deficit here has more than doubled since the end of the Great Recession
  5. So our hunger for foreign made goods is reason for the trade deficit