Alan Tonelson, a U.S. Business and Industry Council research fellow, offers this read on the latest GDP report:
While the American economy grew at an annualized rate of 0.1 percent in the first quarter of 2014, according to the Commerce Department, the “sequential worsening” of the trade deficit – from $382.8 billion in the fourth quarter of 2013 to $414.4 billion in the first quarter of 2014 — subtracted 0.83 percentage points from that growth.
“The next worse trade performance in U.S. history came in the fourth quarter of 2002,” he reports. “Then, the economy grew at a real annualized rate of 0.2 percentage points. But the widening of the trade deficit subtracted 1.34 percentage points from that performance.”
“For comparison’s sake, in absolute terms, there have been much bigger quarterly hits delivered to growth by the trade deficit’s worsening. For example, in the fourth quarter of 1947, the real trade deficit’s widening subtracted 4.22 percentage points from annualized real GDP growth. But that GDP growth was 6.5 percent.”