People: Accounting identities do not imply causation!
Remember our friend, the trade deficit? You know, the "drag on growth"!
Well exports surged and the deficit fell 14% in July. But our press corps still writes crap like this:
Economists said that the smaller trade deficit in July meant there would be less of an impact on the third-quarter gross domestic product than the deficit had in the second quarter. The estimate for second-quarter growth was revised downward to 1.6 percent, from 2.4 percent, partly because of the expanded June trade deficit, which dragged growth down by 3.4 percentage points that quarter.
As a matter of accounting, the arithmetic is correct. But the suggestion that the trade deficit CAUSED growth to be lower by some measurable amount is completely unproven and just plain wrong.
The argument implies that there somehow would have been perfect substitutes for all imported goods being produced domestically and available for sale at the same price. Thus, if we could just keep out those damn imports, growth and jobs would soar.
Yet, this is far from true on the face of it, let alone considering if we banned all imports, we'd have a pretty hard time making any exports and that might create a "drag" on growth too, no?
This article cites anonymous "economists". No economist worth their salt would make such a claim.
Again, the accounting is impeccable, but the causal implications being drawn are garbage.