Trade, Truth, and Trump

Of course, I’m grateful to Yahoo News’ Rick Newman for spotlighting my finding that the rising U. S. trade deficit is further hobbling an American economic recovery from the Great Recession that is quite slow enough, thank you. It’s almost unheard of for a journalist or anyone involved in economic policy to acknowledge this point. (And it was especially cool to be featured briefly in the video accompanying the post!) At the same time, much more needs to be said about the trade deficit and growth than Rick’s post suggested. So here goes.
First, Rick presented my findings as an ‘argument.’ Actually, as readers of RealityChek know, as anyone who has taken an Economics 101 course should know, and as I know Rick knows, the growth-killing effects of rising trade deficits are not a matter of opinion – unless you have major problems with the way the U. S. government and the entire economic profession has been calculating changes in the economy’s size for decades. Not that it’s out of bounds to question the accuracy or the entire methodology of the gross domestic product (GDP) statistics. But it’s surely significant that such challenges still represent a distinctly minority viewpoint.
Second, because the methodology is not in any current-policy sense controversial, the specific numbers I provided aren’t, either. As I told Rick in an email, according to the latest data from the Commerce Department, in the fourth quarter of 2015, real GDP annualized was $16.4551 trillion. At the end of the second quarter of 2009, when the recovery began, it was $14.3556 trillion annualized. So real growth has been $2.0995 trillion.

This post was published at Wall Street Examiner by Alan Tonelson ‘ March 8, 2016.