This means that even if the world economy grows at the same rate as the U.S. economy, our trade deficit is likely to widen, (apart from any changes in relative prices).8 Indeed, the U.S. primary trade deficit has widened steadily since 1990.
Adjustments I have just argued that the U.S. is now in violation of the stability condition for both budget and trade deficits - recently and moderately on the budget side, persistently and significantly on the trade side. What are the implications? With each deficit there is probably a credibility range.