US trade deficit reflects economic growth

By Alex Singleton | 13 April 2005

While some are worried that the US trade deficit has reached an all-time high, Daniel Griswold isn't. In Forget Trade Deficits: Go for Growth, he writes: "The trade deficit tends to expand along with the economy and contract when the economy slows. In fact, an analysis of economic data from the last quarter century shows that a growing current account deficit (as a percentage of gross domestic product) is associated with faster, not slower, economic growth, as well as rising manufacturing output and falling unemployment.”