It's A Mistake To Worry About Inflation

TBI - Project Syndicate ^ | 6-8-2013

[expat_panama]

The trade deficit is not going to be perfectly correlated with unemployment.

If you say so, but which is better, 2006 or now?

[DannyTN]

What that chart shows is that both the unemployment rate and the trade deficit are both strongly correlated with the economy. When we had a recession unemployment went up and the trade deficit fell, because we couldn’t afford as many goods.

It’s not showing the relationship between the trade deficit and the health of the economy. You can say that the huge trade deficit increase preceded the recession. But the trade deficit is one of many factors that weakened the economy.

[expat_panama]

You can say that the huge trade deficit increase preceded the recession...

I could, but it would be more precise to say the huge increase preceded falling unemployment and it was the decrease of the trade deficit that preceded the recession.

[Tolerance Sucks Rocks]

Does TBI remember the stagflation of the 1970s?