Posted by: Michael Mandel on August 12
I’ve been fairly grumpy this past week, dissing the employment and the productivity stats. But this morning I saw a number that I liked: The non-oil trade deficit, which shrunk to about $20 billion in June.
Why is the nonoil trade deficit important? To my mind, the financial crisis was not truly over as long as the U.S. was borrowing hundreds of billions from the rest of the world to pay for imports. That is, if the crisis was about too much debt, adding on more debt can’t be a good thing.
There’s really nothing we can do about our oil imports in the short run. But it should be possible to bring down the nonoil deficit further. How far? A lot more, I think. I don’t know if zero is possible, but given the depth of the downturn, it would be good to get as close to that as we can.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.