Ethan Harris Deficit Quotations

Only with very weak U.S. growth or a major drop in the U.S. dollar will the trade deficit improve on a sustained basis. The reason you need these dramatic movements is that the U.S. has, according to almost every study, an incredible appetite for imports.

The U.S. pointing to China is a bit like the pot calling the kettle black. The deficit with China reflects poor policy on both sides of the Pacific.

That's the big lingering risk factor sitting out there on the horizon. Will we have a gradual adjustment, where the trade deficit gradually improves, or will we have an accident along the way?