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Illustration: Sarah Grillo/Axios
The U.S. trade deficit — how much the country buys from abroad versus how much it sells — rose to a 10-year high last year. And economists surveyed by Axios say there's only one certain way that President Trump can achieve his cherished aim of slashing it — push the economy into recession.
Driving the news: The 12.5% jump in the 2018 trade deficit, reported today by the Commerce Department, is the result of a growing economy, stimulated by Trump's tax cuts, economists agree, and not something amiss.
Background: Trump is conducting a multi-front trade war, the main purpose of which is to push down the country's global trade deficit, which he calls unfair and bad for Americans. Although most mainstream economists disagree — trade deficits reflect economic health, not malaise, they say — cutting the gap is a pillar of Trump's presidency.
By the numbers:
"Trump is over a barrel because he has made reducing the trade deficit a measure of his success in trade policy. And by that measure, he is failing," said Edward Alden, a senior fellow at the Council on Foreign Relations.
A thought bubble: Trump has voiced his view on debt for decades. His obsession doesn't mean he is taking the U.S. into recession, but that — if he wants a materially lower trade deficit — he needs to hope for one. Or pile burdens on the economy that take the country there.
The bottom line: As of now, the relatively robust U.S. economy is staving off recession for the rest of the world. The widening trade deficit lowers 2018 GDP growth to 2.9%, 0.3% below previously reported, and that's likely to be the peak before the next economic downturn, says Joseph Brusuelas, chief economist at RSM.
Illustration: Aïda Amer/Axios
The law of gravity applies to the national debt after all: Inflation, interest rates and private investment can all still go awry given the wrong set of fiscal events.
But two leading mainstream economists who are part of the debt debate say that even though the old demons have not reared their heads to date, the danger of them surfacing remains.
Specifically, despite the U.S. possession of the global reserve currency — a central point cited by the pro-debt economists — it can't just spend using U.S. treasuries and never pay back what it's borrowed.
Larry Summers, a Harvard professor and former U.S. Treasury secretary, co-authored an article in the current issue of Foreign Affairs titled, "Who's Afraid of Budget Deficits."
No one knows where the trigger point is — which level of spending, or what set of events, will bring about runaway inflation, a surge in interest rates, or crowd out private investment, says Olivier Blanchard, former chief economist for the IMF and a senior fellow at the Peterson Institute.
I asked Blanchard if you can finance the entire federal budget with debt, since interest rates and inflation seem under control. He calculated the outcome of such spending aloud, step by step, before concluding: "Nope. You would be crazy to go there."
In Brooklyn. Photo: Spencer Platt/Getty
Four years ago, two discount retail kings — Dollar Tree and Dollar General — were fighting over who would absorb the third dollar store giant, Family Dollar. Dollar Tree won out.
But today, lagging sales at Family Dollar are actually dragging Dollar Tree down, reports WSJ.
Erica writes: As we've reported, discounters have long profited from the rise of income inequality in the U.S. And with a recession likely in the near future, the dollar store business will keep ballooning, Louis Hyman, a business historian at Cornell, tells Axios.
For Dollar Tree, which owns 15,000 stores across the country, that's a drop in the bucket. But, to add context, 400 stores is almost equal to the total of the Whole Foods chain.
Millions of antiquated voting machines (The Economist)
Facebook's sinking reputation (Scott Rosenberg — Axios)
The troubling rise of the Central American coffin business (Matthew Bremner — Bloomberg)
Vietnam, in China's shadow (Sebastian Strangio — Nikkei Asian Review)
The Amazon divide in American retail (Stephen Grocer — NYT)
After the parade. Photo: Emily Kask/AFP/Getty
Every year, a million people descend on New Orleans' French Quarter for the epic Mardi Gras. Paraders bring around $165 million in tourist revenue, but they also leave behind lots of trash, reports Bloomberg.
Erica writes: A big portion of that trash is made up of shiny plastic gold, purple and green Mardi Gras beads.