HONOLULU (HawaiiNewsNow) - The Commerce Department this morning reports a 10% spike in the U.S. trade deficit. Apparently we bought a whole lot of goods manufactured in China.
This seems like a good time to put the trade picture in perspective.
There are four main components of the American economy. GDP is gross domestic product, sum total of goods made and services renders, IN America. This does not include what Ford makes in Mexico. It does include what Toyota makes in Tennessee. Fully 70% of GDP, $13 trillion a year, is consumer spending. Government spending and business investment each make up roughly $3 trillion.
And this little wedge here? Net exports – after subtracting imports – HALF a trillion dollars. Now, $500 billion isn't nothing. But in the grand scheme of things it's not the most important.
IF you want the economy to grow, you can encourage business investment. In an emergency you can even raise government spending, provided it's the moral equivalent of business investment, like fixing bridges and roads.