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Trade Deficits and Economic Growth

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The U.S. merchandise trade deficit jumped unexpectedly in July, rising to $10.3 billion from $8.3 billion the month before. Many economists now expect our current account deficit - a broad measure of the U.S. trade imbalance - to exceed $160 billion in 1997, up from $148 billion in 1996. To many observers, a persistent trade deficit reveals an inability to compete in world markets that inevitably threatens a nation's standard of living.

Suggested citation: “Trade Deficits and Economic Growth,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-10, pp. 19, 10.01.1997.

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