Earlier we posted an infographic about the U.S. trade deficit, and how it has grown over time. There were three things that I did not like about the infographic, so that started me asking the question about how I would improve upon it. The first thing that needed to be done was to get the data on the trade balance. That data is provided by the U.S. Bureau of Economic Analysis. This is not to be confused with the National Bureau of Economic Research (NBER) which provides the start and ending dates of recessions. While they have similar names, they are not the same organization.
As I wrote earlier, a trade deficit occurs when a country imports more goods than it experts. In other words, it is a transfer of wealth from one country to another. Over a short period of time, this is not a problem. However, over many years, or decades in the case of the United States, this can be a problem. One of the real questions in economics is why this has not been more of a problem for the United States than it has been. If you look at the chart below, the trade deficit has ballooned over the past decade.
One observation that you could make from this chart, but not from the previous graphic, is that the trade deficit has actually shrunk since it bottomed in 2006. Why is this? There are two reasons really. The first, and most obvious, is that we have had a recession the past few years. That has put a damper on trade, and especially on imports. The second reason is that is that oil prices have plummeted from a high of $145 to around $75 today. Of course, oil prices are tied into how well an economy is doing.
This chart looks at yearly data, with the data for 2009 being preliminary. If you switched to using monthly data, you would see that the trade deficit is once again increasing.
