US trade gap a sign of growing economy, says Snow

I think that your ideological leanings have reached the event horizon...

What, no rational or evidentiary response from Cato? No evidence to show that the dollar is really going up. And up. And up. No evidence that the rubric of "productivity increases" are not being advanced as a disguising pretext for substitution of race-to-the-bottom low-wage imported components? And so on.

Typical, no proof, just ad hominem attacks. I wonder how you free traders would do in China arguing against their protectionist policies. I suspect you would, if a native Chinese, wind up in their version of the Gulag inside of 3 weeks. As a foreigner, however, you currently get the full Walter Duranty treatment.

I never claimed that recessions were caused by trade surpluses but what I did say was that it appears that higher trade deficits seemed to be linked with larger GDP growth and surpluses with lower growth. I do think these things are related because if a business can save on its expenses through trade, owners make out better. And, the lower the costs are, the more the savings can be passed on to consumers too - giving them a budgetary savings that can be used on addition consumption of other things...all underpinning of the comparative advantage.

I agree that there are definite advantages to free trade. However, I think that there's also a strong argument that nations sometimes need to regulate that trade based on the overall national interest. It nothing else, a nation needs to do this to counter similar policies being followed by other nations. On this topic, I find Warren Buffett's suggestion for Import Certificates at http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html to be interesting. Of course, as Buffett himself says, there may be problems with this policy and/or there may be policies that would work better. In any case, I think that the growing trade deficit is an important issue and needs to be addressed, or at least debated, on a national level.

This is a loaded question. First one would have to assume that the actual GDP number (not the percentage growth of) could have been achieved without the 6% capital account surplus - the flip side of that 6% trade deficit. Now, the more appropriate question would be if the actual change in net export value was offset by the actual change in the numerical growth of the GDP. You can find the data or chart on that one if you want...if I did it I'd probably just screw it up!

I'll take a look at it if I get a chance. In any case, don't be too hard on making an occasional mistake on a chart or explanation. At least you're analyzing and recrunching the numbers. Far too many people just accept the interpretations of data that are provided by the "experts", I think.

I have not a clue, but just so I'm clear; what do you mean by U.S. Nonfinancial Debt?

It's usually described as Domestic Nonfinancial Debt and at the bottom of the page at http://home.att.net/~rdavis2/nfdebt.html, I noted that it consists of outstanding credit market debt of U.S. Government, State & Local Governments and private nonfinancial sectors. There's a pie chart at http://www.comstockfunds.com/files/NLPP00000%5C181.pdf, that gives the following as its composition on 6/30/2003:

41% Mortgages
 9% Consumer Credit
13% Corporates
 9% Municipals
18% Governments
10% Other (Bank Loans, CP etc.)

In addition, there's a description of it in the Federal Reserve's Flow of Funds Summary Statistics for the third quarter 2004 at http://www.federalreserve.gov/releases/z1/current/accessible/summary.htm.

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