Why the U.S. Trade Deficit Is Big, But Not Bigger

The trade deficit is a lot smaller than it was a decade ago: Over the 12 months ending in June, according to data released last week by the Commerce Department, the U.S. imported about $531 billion more in goods and services than it exported. In 2006, the deficit was $762 billion. Those numbers aren't adjusted for inflation; if they were, the decline would be even more pronounced.

This narrowing of the trade gap does not, however, signal a U.S. manufacturing renaissance -- at least not yet. The two main reasons the deficit has declined are that (1) U.S. oil production has boomed and (2) U.S. services exports have continued to outpace imports.

There was a time when trade deficits were big news. These days, although President Donald Trump talks about them occasionally, they generally aren't. That's got to be partly because they're not setting records anymore. It also might be fatigue -- so many alarms were raised about trade in the U.S. back in the 1980s and 1990s that people got a little tired of hearing about it. According to Google Books' Ngram Viewer, which covers books published through 2000, use of the term "trade deficit" peaked in 1989. Google Trends, which tracks use of search terms since 2004, shows a long decline for "trade deficit" after that and a modest resurgence starting last year. The increasing sophistication (and financialization) of popular discussion of economic matters may also play a role: Use of the search term "current account," which is the trade balance with cross-border income flows added in, has been on the rise since about 2009.