U.S. trade balance in goods and services on a balance of payments basis, seasonally adjusted Photo: Statista/IBT

When things turn sour for the U.S. economy, the country’s trade deficit, i.e. the difference between exports and imports, usually narrows. As consumer spending goes down during economic downturns, so do imports of goods directly or indirectly targeted at consumers, and as Americans tend to travel less during recessions, service imports (which is how tourist spending abroad is accounted for) also tend to fall. At the same time, loose monetary policy tends to result in a relatively weak dollar, in turn boosting exports and attracting foreign tourists.

As the following chart illustrates, things are different this time around. Despite the COVID-19 pandemic having brought on the deepest recession on record along with an unprecedented jobs crisis, the current downturn did not result in the usual narrowing of the U.S. trade deficit. Quite the