Feb 10

Trade-deficit, the bigger the better?

Data of the December US international trade was declared, and economists showed positive response to the jump of trade deficit.
In December 2009, US imported 4.8% more to $182.88 billion, when exports climbed 3.3 percent to $142.70 billion. That is, trade deficit surged to $40.18 billion. However, instead of worrying about the increasing high debt hold by foreign countries like China, economists consider that to be a positive signal pointing to the economy recovery. They believe, the increase of trade-deficit, which mostly caused by the increase in oil importation, means US is producing more goods.
Applying that fact to the theories I am learning in class, that make sense. too.
More trade deficit simply leads to more goods to be consumed domestically. Because of the multiplier effect, economy activities would be boomed up by several times more than initial deficit amount. It is even better when the deficit is mainly made up by energy purchase. The oil imports ensures US's reproduction ability. As we use more oil, we produce more goods, which gives us even more to consume and the firms more profit. With the increasing profit of firms, we would step onto a positive virtuous circle pushing our economy back to normal.
The current situation leads to an assumption which seems weird. During a recession, like what we are now, is it the bigger the trade-deficit is, the better it is for our economy? From my point of view, that is just the case.