The economic growth rate of the United States tends to be higher in the year when the current account deficit is enlarged, but generally lower in the year when the current account deficit is reduced. Specifically, since 1980, among the five years with the fastest GDP growth in the United States, four years have also seen the fastest growth in the current account deficit in the United States. Since 1980, the average economic growth rate has been only 1.9% in the years when the current account deficit has shrunk. In the years of moderate growth and rapid deterioration of the current account deficit, this figure was 3.0% and 4.4% respectively.
It is generally believed that the trade deficit will directly harm the manufacturing industry and employment opportunities, because imported products will replace domestic products and jobs will be transferred abroad. However, the statistics of the United States in the past 25 years do not accord with this "common sense". Among the six consecutive years of negative growth in American manufacturing, five years are also years with low current account deficit. On the contrary, the average growth rate of manufacturing output value is 4. 1% and 5.3% in the year when the current account deficit rises slightly and expands greatly, respectively.
Extended data
It is of great practical significance to deeply study and understand the relationship between American trade deficit and economic growth.
In recent years, with the rising trade deficit, the tendency of trade protectionism in the United States has risen frequently. There is a group of people in the US Congress who are eager to set and raise trade barriers. People of insight pointed out that if American politicians mistakenly believe that protectionism can reduce the trade deficit and stimulate economic growth, then they will only damage American economic growth and trigger a trade war with serious consequences. "They will create more troubles instead of solving more problems."
People's Daily-People's Daily: The bigger the US trade deficit, the faster the economic growth?