Changing U.S. trade patterns
The last year in which the U.S. merchandise trade balance recorded a back-to-back annual surplus was twenty years ago, in 1970. That surplus was $2.6 billion on the balance-of-payments basis. In 1987, the merchandise trade deficit bottomed out at $160 billion. By 1989, the deficit had been reduced to around $110 billion (see Figure I). Much has been made of the persistent U.S. trade deficit, why it became so large, why it has improved in recent years, and why, finally, it has not improved more.