Economy

Does a Wider Trade Deficit Even Matter?

The trade balance has begun to matter again. After all, lower energy imports and higher energy exports have been a game changer in America. That being said, should we be concerned that one month’s report from the Commerce Department showed a wider trade deficit?

For starters, this was a February number, and that makes the data now more than six weeks old on average. Much of the central part of America and the Northeast were still suffering from adverse weather conditions for part of the month. Unfortunately, this was still the widest trade deficit in about five months, and that caused some raise eyebrows.

A driving force behind the wider deficit was lower exports of energy and capital equipment — taking the total to a deficit of $42.3 billion from $39.3 billion the prior month. Bloomberg was calling for the reading to be a $38.8 billion deficit, and Dow Jones called for a $38.6 billion deficit.

We might point out that the wider deficit will hurt growth in the quarter, but the reality is that it could very well just be an anomaly. Perhaps no rate change from the European Central Bank, while keeping the door open for their own round of quantitative easing, matters more in the grand scheme of things.

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