Because the waxing and waning of the U.S. trade deficit is directly proportional to the rate of economic growth.
Economic growth rates tend to be higher in years when the U.S. current account deficit widens, and generally lower in years when the current account deficit narrows. Specifically, since 1980, four of the five years with the fastest growth in U.S. GDP have also been years with the fastest growth in U.S. current account deficits. Since 1980, the average rate of economic growth in years with narrowing current account deficits has been only 1.9 percent; in years of moderate growth in current account deficits and years of rapid deterioration, the figures have been 3.0 percent and 4.4 percent, respectively.
It is generally assumed that trade deficits cause direct damage to manufacturing and jobs as imported goods replace domestically produced goods and jobs are shifted abroad. But U.S. statistics over the past 25 years are inconsistent with this "common sense". In the United States manufacturing negative growth in six years, five of the current account deficit is also low in the year. On the contrary, in the current account deficit climbed slightly in the year and a significant expansion of the year, the average growth rate of manufacturing output was 4.1 percent and 5.3 percent, respectively.
Expanded Information
In-depth study and understanding of the relationship between the U.S. trade deficit and economic growth is of great practical significance.
In recent years, as the trade deficit continues to climb, the United States of America's trade protectionist tendencies frequently rise. A group of people in the U.S. Congress have been vigorously agitating for the setting and raising of trade barriers. Insightful people have pointed out that if U.S. politicians wrongly believe that relying on protectionism can cut the trade deficit and stimulate economic growth, they will only end up harming U.S. economic growth and triggering trade wars with serious consequences, and "the trouble they create will far outweigh the problems they solve."
People's Daily: the larger the US trade deficit, the faster the economic growth?