The trade deficit climbed once again to a nine year high, prompting once again concerns that the United States might impose stiff tariffs on major trading partners. There are some simple explanations, including the low rate of US savings.
But some commenters are apparently suggesting that the source of the problem isn’t just imports, but that the US economy, when running at full capacity, may not be able to meet domestic demand. I’m not entirely sure if that’s correct, but if it is, it suggests that the most direct response for nudging down the deficit would include nudging up lackluster US productivity. But that could involve more automation, and by extension, longer (and higher) structural unemployment, which isn’t exactly the boost to the economy I’d hope to see.