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If Trade Surpluses are So Great, the 1930s Should Have Been a Booming Decade

The incessant fretting over the U.S. trade deficit is unwarranted.  As I point out (probably too) often, the trade deficit, along with its broader cousin, the current-account deficit, are no cause for concern.

Earlier today I visited the National Bureau of Economic Research’s Macrohistory Database.  I clicked on Chapter 7 and then looked at the value of U.S. imports and the value of U.S. exports for each of the 120 months during the 1930s.

Turns out that for only 18 of the 120 months of that dreary decade did the United States run a trade deficit (that is, imported more, value-wise, than it exported).  For each of the remaining 102 months of the decade of the 1930s the U.S. ran a trade surplus.

On an annual basis, the only year of the decade of the 1930s that the U.S. ran a trade deficit was 1936; in each of the other nine years the U.S. ran a trade surplus.

And for the Depression decade taken as a whole, the U.S. ran a substantial trade surplus.  Exports over those economically challenging ten years totaled $26.05 billion while imports totaled only $21.13 billion.  In other words, the U.S. trade surplus during the entirety of the 1930s was nearly 19 percent the size of the total value of U.S. exports during that decade.

The above data prove nothing.  Economies are far too complex to justify drawing simplistic conclusions such as “The 1930s was a decade of U.S. trade surpluses; the 1930s was also marked by one long economic depression; therefore, trade surpluses are bad for economies.”  But the above data do show that all the fashionable fretting about trade deficits (which the U.S. economy has run for most of its history) is itself simplistic and uninformed.