Bad Economy Good For A Lower Trade Deficit

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The trade deficit alone may not be the most insightful measure of economic conditions, I agree, however it can be quite useful when combined with certain other aspects of a contry's balance of trade.
The trade deficit, a component of a country's balance of payments (BOP), can be used, along with other current account data (services trade, income, and current transfers), capital account and financial account balances to obtain very useful economic information. The trade deficit is a component of the balance of payments and when analyzed in that context it can be used to shed light on GDP, exchange rates, interest rates and inflation rates.

P.D of MI 10:53AM January 26, 2010