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Europe’s Tea Parties
The trade deficit
As Americans cool on imports, the current-account deficit shrinks
ANY American who bought a top-of-the-range Maytag Maxima front-loading washing machine a few years ago contributed in his own small way to the country’s persistent trade deficit; the machine was made in Germany. Not so anyone who has bought one in the past six months, because Whirlpool, the manufacturer, has since moved production to a plant in Clyde, Ohio.
That shift helps explain a remarkable improvement in America’s external accounts. At the end of 2005 the current-account deficit reached 6.2% of GDP, the sign of a society living dangerously beyond its means. But by the third quarter of 2013 it had dropped to 2.2%, the lowest since 1998, a level it could easily sustain indefinitely.
The deficit has …