Tags: Goldman | trade | deficit | economy

Goldman Sachs: Trade Deficit Good for US Economy

By    |   Wednesday, 22 October 2014 03:05 PM

When economists bring up the U.S. trade deficit, which totaled $472 billion last year, they usually cite it as a negative for the economy. After all, that number is directly subtracted from GDP, the value of the economy.

But Goldman Sachs economists view it differently. "At a time when domestic growth drivers are clearly picking up, we see several reasons for optimism," Jan Hatzius and David Mericle write in a commentary obtained by CNBC.

Because the United States doesn't depend heavily on exports to fuel its growth, the deficit is less harmful to the economy than it would be to Germany, for example. Moreover, many of the imports are low-cost goods feeding the desires of U.S. consumers.

The $2.08 trillion of U.S. exports in the second quarter accounted for just 13 percent of GDP ($16 trillion). By contrast, personal consumption, at $10.9 trillion, made up 68 percent of GDP.

That helps explain why Goldman economists forecast 3 percent growth in the U.S. next year, compared with about 1 percent for Japan and the eurozone.

"The extent of the U.S. growth outperformance is not unusual by historical standards," Hatzius and Mericle note.

"Performance gaps between advanced economies are at or below the long-term historical norm, and emerging economies continue to grow faster than advanced economies, though the gap is smaller than the average of the last decade."

The trade gap narrowed to $40.1 billion in August, the lowest level in seven months, as exports rose to a record high. Petroleum exports helped spark that advance.

"In one line: flattered by oil exports. . . . Trade will make a hefty contribution to Q3 GDP growth," Ian Shepherdson, chief economist at Pantheon Macroeconomics, writes in a commentary obtained by Business Insider.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Finance
When economists bring up the U.S. trade deficit, which totaled $472 billion last year, they usually cite it as a negative for the economy. After all, that number is directly subtracted from GDP, the value of the economy.
Goldman, trade, deficit, economy
291
2014-05-22
Wednesday, 22 October 2014 03:05 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved