MICHEL MARTIN, HOST:
And now we want to turn to the economy. A couple of figures made news this past week. According to the Commerce Department, the U.S. trade deficit in merchandise ballooned to $891 billion last year. That's the largest in history. And, yesterday, the Labor Department reported that the U.S. economy added only 20,000 jobs in February, and that is well below what analysts expected.
So we wanted to get a sense of what all this might mean for the U.S. economy, so we've called David Wessel. He's a senior fellow in economic studies at the Brookings Institution, where he directs the Hutchins Center on Fiscal and Monetary Policy. David Wessel, thanks so much for joining us once again.
DAVID WESSEL: It's good to be with you, Michel.
MARTIN: So let's start with the most recent figure - the employment report substantially weaker than the trends of the last few years. Analysts said this was not what they expected. Why is that?
WESSEL: Well, we don't really know why it happened. I think the question is - is the fact that we created only 20,000 jobs in February - is that a warning sign or a fluke? I think, ordinarily, people would say it's a fluke. After all, the unemployment rate is still very low. But there's so many other worrisome signs in the economy - slowdowns around the world, the damage done by the president's tariffs and so forth - that this may be a sign that things are starting to slow.
MARTIN: So let's talk about the trade deficit for a minute. It grew to $891 billion in merchandise. But even if you include the broader figure that includes services, that's a $621 billion deficit, and that's more than 100 billion greater than the figure that President Trump inherited from President Obama. So what does that mean?
WESSEL: The president's tariffs and the retaliatory tariffs from our trading partners probably are having some negative effect. But the much bigger reason for this is quite simple. Our economy is growing faster than the economies of our major trading partners. Even China's starting to slow down. So when China slows, when Europe - which has slowed, precipitously - slow down, they buy less of our stuff. We're doing relatively better than they are. We buy more of their stuff. The trade deficit widens.
MARTIN: So I guess I'm looking for a big picture there, if you feel comfortable giving us one. I mean, on the one hand, this is the 10th anniversary of the start of the bull market. We know that the president's budget is being delivered on Monday. One sign that concerns a number of people is that the budget deficit is rising, you know? Overall, how should we look at all these indicators kind of put together? Is this a glass-half-full story, a glass-half-empty story? How should we think about it?
WESSEL: The economy has been doing very well for the past couple of years. That's why unemployment is at 3.8 percent, which is roughly a 50-year low. And, finally, finally, wages are starting to go up faster than the rate of inflation. So I would say if all you were doing is looking in the rearview mirror, you would say things are doing better. And we have lots of chronic problems to solve, like inequality. I think the concern is that the best of the Trump years of the economy may be behind us, and it doesn't seem like we are willing to do the things that are necessary to put us on a faster growth pack for the long-term.
MARTIN: That is David Wessel. He is director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. That's a research institute here in Washington, D.C. David, thanks so much for talking to us.
WESSEL: You're welcome, Michel. Transcript provided by NPR, Copyright NPR.