Source: EconLog
by Jon Murphy
“The United States, like most other countries, use a method of double-entry accounting to track certain aggregate statistics known as National Income Accounting. One of the statistics tracked is the balance of trade. The balance of trade reports the difference between imports and exports. … The connotations of the words ‘surplus’ and ‘deficit’ (coupled with the accounting conventions of pluses and minus) give the impression to those who do not understand the balance of trade that deficits are bad while surpluses are good. But, digging a little into the accounting shows that 1) ‘deficits’ and ‘surpluses’ are value-free and 2) referring to these as ‘trade deficits/surpluses’ is something of a misnomer.” (05/14/26)
https://www.econlib.org/econlog/the-trade-deficit-is-a-misnomer