Dean Baker of the Center for Economic and Policy Research writes about how a New York Times story on the trade deficit used the number for goods and not the whole trade deficit, which includes services.
Baker writes, “That’s all water under the bridge now, but it would be nice if the major news outlets could get the story right going forward. They sure are not doing it now.
“In a piece discussing the merits of Trump’s idea of having balanced trade with each country, the NYT told readers:
“Some economists do agree with the Trump administration that America’s overall trade deficit with the rest of the world reflects a problem for the U.S. economy, because the United States is so dependent on manufacturing elsewhere, including in China. The U.S. trade deficit hit a record $1.2 trillion last year, as imports surged.”
“The problem with this assertion is that the trade deficit did not hit $1.2 trillion last year. It was $903.1 billion. This was not a record in absolute terms; it was $958.9 billion in 2022, and it certainly was not a record as a share of GDP. That peaked at 5.7 percent in 2005 and 2006. By comparison, it was 3.1 percent last year.
“It’s possible that the piece was referring to the deficit on merchandise trade. This excludes services like travel, shipping, royalties and licensing fees, and financial services. Our trade deficit on goods was $1.2 trillion last year, which is a record, although not as a share of GDP. The record deficit for goods alone was 6.2 percent in 2005 and 2006. By comparison, it was 4.1 percent of GDP last year.”
Read more here.
