A Trade War Could Wreck It All

The U.S. economy has been experiencing the strongest and possibly longest expansion on record, with more than eight million new jobs since President Reagan took office. The stock market has nearly doubled any previous record, and interest rates are the lowest in nine years. The Congressional Budget Office just lowered its estimates of budget deficits for 1987-1990 by a total of $411 billion. Yet there is a stubborn sense of despair among those who write about the economy. This American locomotive of world commerce is said to be “uncompetitive,” afflicted with some mysterious disorder.

After three years of waiting like vultures for assorted crises that failed to occur, critics of Reaganomics have turned in desperation to the trade deficit. The U.S. is said to have “lost jobs” to foreign competitors, though the U.S. has added far more jobs than all other industrial countries combined. The 23 per cent increase in U.S. industrial production over the past three years compares quite favorably with the 19 per cent increase in Japanese production and the 12 per cent increase in European production.

About the Author

Alan Reynolds

Alan Reynolds, National Review’s economics editor from 1972 to 1976, is a senior fellow at the Cato Institute and the author of Income and Wealth.

Featured Tags

Manage following

Economics

Trade

The U.S. economy has been experiencing the strongest and possibly longest expansion on record, with more than eight million new jobs since President Reagan took office. The stock market has nearly doubled any previous record, and interest rates are the lowest in nine years. The Congressional Budget Office just lowered its estimates of budget deficits for 1987-1990 by a total of $411 billion. Yet there is a stubborn sense of despair among those who write about the economy. This American locomotive of world commerce is said to be “uncompetitive,” afflicted with some mysterious disorder.

After three years of waiting like vultures for assorted crises that failed to occur, critics of Reaganomics have turned in desperation to the trade deficit. The U.S. is said to have “lost jobs” to foreign competitors, though the U.S. has added far more jobs than all other industrial countries combined. The 23 per cent increase in U.S. industrial production over the past three years compares quite favorably with the 19 per cent increase in Japanese production and the 12 per cent increase in European production.