Well, yes and no. Yes, if some assumptions are accepted. No, just looking at the raw numbers.

If we assume that U.S. consumption would have remained constant regardless of the size of the trade deficit, magically reducing the trade deficit to zero in the year 2005 would have added 726 billion dollars to the total of goods and services produced and consumed in the U.S.

If we could have produced in the U.S. and sold in the U.S. the 726 billion dollars worth of goods and services we imported in 2005 in excess of our exports, the U.S. would have been 726 billion dollars richer at the end of 2005 than we actually were.

Using this set of assumptions, we can divide 726 billion dollars by the 111 million household in the U.S. on July 1, 2005 and conclude that each household in the U.S. was 6,540 dollars poorer at the end of 2005 due to U.S. trade.

Do I take this calculation seriously?

Well, yes and no. Yes, in that it is closer to reality than any competitor number I have seen. No, in that consumption probably would be less without the trade deficit.


W. Raymond Mills