The Little Brown Reader: Trade Deficit's Real Meaning

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May 20, 2004

Trade Deficit's Real Meaning

Commerce Department figures released Wednesday showed that America’s trade deficit last year with the rest of the world reached a record high . This means that Americans purchased more foreign goods and services than they exported — a measure of the great strength of the U.S. market.

But the numbers also showed that the deficit declined in the last three months of the year, which may lend credence to Federal Reserve Chairman Alan Greenspan’s worry that the U.S. economy could be slowing.

Congress could help prevent a severe slowdown by rejecting calls to erect trade barriers that the trade deficit news is likely to generate.

...

Protectionist policies that pull up the drawbridge on foreign goods would have exactly the opposite effect. They would signal fear and weakness. The president should make sure that members of both parties understand that.

Posted by Lance Brown at May 20, 2004 08:29 PM | TrackBack

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