Shrinking Merchandise Trade Deficit Significance.pdf
That concerns me greatly. A large trade deficit means that there is prosperity in our population. We have surplus money to spend and a lot of it is buying goods from other countries like China. What do the Chinese do with their profits? They either spend it on what our service economy offers or they invest in our capital markets. That balances our capital account and everything is even.
Here is the problem. Much of our service sector has been bolstered politically. At the same time services the Chinese have always been interested in are waning in utility for them. They are buying less of our services or plan on buying less.
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