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September/October 1999, 
Vol. 81, No. 5
Posted 1999-09-01

The U.S. Trade Deficit and the "New Economy"

by Michael R. Pakko

Amidst the overall strength and longevity of the U.S. economic expansion of the 1990s, a growing current account deficit is one indicator that often is viewed with concern. This article discusses some basic economic principles about current accounts and how they relate to the U.S. experience during the 1990s. It suggests that recent deficits should not be thought of as a source of weakness in an otherwise vigorous economy, but rather, that they are reflective of the same forces underlying recent economic strength.