Por Qué el “Misterio” de la Balanza Comercial No Es un Misterio

October 15, 2020

We recently learned that the US trade deficit increased more than expected in August. Why the confusion and mystery regarding the negative US external balance? After all, the US has had a negative external balance every year since 1975. The reason for that is simple. The negative external balance is "made in the US" —A result of your savings deficiency.

To see the external balance correctly, the focus should be on the domestic economy. The external balance is done at home; It is produced by the relationship between savings and investment at the domestic level. In fact, this consists of the gap between a country's savings (read: income, minus consumption) and domestic investment that drives and determines its external balance.