Yesterday we reported that the US Trade Deficit hit its highest since 2008.What we didn’t account for however was how it affected the GDP.

Breitbart:

The trade deficit rose 5.3 percent in December to $53.1 billion, more than expected by economists. For the entire year, the trade gap jumped 12.1 percent to a nine-year high of $566 million, according to data released by the Commerce Department Tuesday.

The trade gap widened despite exports rising 1.8 percent and hitting an all-time high of $203.4 billion. Imports, however, rose by more: 2.5 percent to $256.5 billion.

A widening trade deficit threatens to undermine the Trump administration’s goal of achieving 3 percent or better economic growth. Trade deficits subtract from gross domestic product. In the fourth quarter of 2017, a larger than expected trade deficit depressed economic growth by slightly more than a full percentage point, so that the economy grew at just a 2.6 percent rate.

I didn’t even take into account how trade deficits affect the GDP. 2.6% growth was underwhelming considering it was on pace to hit over 3% and it is now clear that Trade Deficits were likely a major thing holding it back.

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