On Wednesday, the Commerce Department stated that the federal trade deficit jumped to a record high for the decade.
The report stated, “The U.S. monthly international trade deficit increased in December 2018 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $50.3 billion in November (revised) to $59.8 billion in December, as imports increased and exports decreased. The previously published November deficit was $49.3 billion. The goods deficit increased $9.0 billion in December to $81.5 billion. The services surplus decreased $0.5 billion in December to $21.8 billion.” This isn’t good news for Donald Trump, who has promised to drastically lower the trade deficit. Although the President may have broken his promise, this large trade deficit isn’t as worrying as you might think it is. Trade gaps can sometimes be caused by a good economy. In 2017, the trade gap increased because the United States had grown its already strong economy.
Trade gaps falling isn’t always a good thing either. During the Great Recession, the trade gap fell by 38% despite America having a very weak economy.