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March 21, 2007

Behind the trade deficit numbers

The United States continues to run a large trade deficit with other countries. But N.C. State University economist Mike Walden says that there's some good news behind the overall statistics.

"If we take out imports of oil and if we also take out our trade deficit with China -- and, of course, those are two important components of our trade deficit –- but, anyway, you take those out, the data actually show that our trade deficit was cut in half last year," says Dr. Walden, a professor of agricultural and resource economics.

"So what this I think indicates is that we really don't have an overall trade deficit problem. We have a two-headed problem: We have a problem obviously with importing oil, the fact that our economy runs on oil. Oil prices go up. That's going to increase our trade deficit based on oil," Walden adds.

"And we do have an issue –- I won’t call it a problem, but an issue -- with China. China, of course, is emerging as a major manufacturing country, and we have found it to our benefit in many cases to buy manufactured products from China," he says. "We are selling a lot to China, but still we are buying more from them. And that has increased the trade deficit there.

"But when you look beyond that to our trade with other countries, we are actually looking pretty good."

Posted by deeshore at March 21, 2007 08:24 AM