The US has had a trade deficit since 1975, so is the US trade deficit really such a bad thing?
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Is it bad? Depends on your point of view. The general outcome of constant loss of money from inside to outside is devaluation of the currency, reduction in real value of wages, and loss of purchasing power. Why can’t the average worker buy a house now when 50 years ago a single-earner with 2 kids could? Part of the reason is that the money we make now is worth a lot less, because of things like eternal trade deficit. Not the only factor, but definitely part of the picture.
It is not just that housing costs have risen so fast, but that real wages have stagnated, in part because we lack money coming in from trade to support wage increases. When we buy from there, it means we are not buying from here, and the people involved in making that stuff here lose their good-paying jobs, and take wage cuts if they can even keep the job at all.
The bigger problem isn’t simply because of negative earnings for the country as a whole, but that the losses are primarily from manufacturing of goods. We don’t have the infrastructure (factories) or labor pool to manufacture many goods anymore, so if we had to (like because of war or some major economic catastrophe), we would suffer quite a bit until the problem got fixed. Can’t build and man factories with trained staff overnight; takes time and money.
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