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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.



) -- International trade is an important and volatile component of global economic growth, one that's commonly misunderstood. For example, last Thursday's U.S. Commerce Department report on trade led off with a discussion of a $6.8 billion reduction in our trade deficit, to a minus $44.8 billion. And, as is customary, the trade gap is what led off most coverage of the report.

Some argue an expanding trade gap is bad. And counterintuitively, last week some argued the shrinking trade gap was also bad -- supposedly as a sign of a slowing economy. But in reality, the trade gap simply doesn't describe U.S. economic conditions. (Although the trade deficit does affect GDP, it's mostly a statistical anomaly. As discussed in our recent article,

"What GDP Doesn't Say

," it's a reason why GDP isn't completely synonymous with economic health.) The more telling metric is total trade.

Calculating total trade calls for adding exports and imports but it is rarely done. However, in our view, this is the most correct way to view trade. Imports can detract from a nation's GDP calculation, but rising imports can be sign of strong demand. Imports can also create massive economic value for consumers and businesses -- by helping firms stay competitive and even resulting in lower prices.

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Moreover, over half of U.S. imports aren't children's toys, cars or food, but equipment and components U.S. businesses use to produce or reassemble goods for final sale or re-export. For example, in the first seven months of this year (the latest data available), one category -- industrial supplies -- outweighed foodstuffs, vehicles and consumer goods combined, according to the U.S. Bureau of Economic Analysis.

Since imports have a positive economic value and can be indicative of healthy demand, it makes little sense to us to statistically account for them as a negative. And it reinforces the point that total trade can be more instructive regarding overall economic health than the trade deficit.

In the chart below, the shaded area represents U.S. recession as determined by the official dating organization, the National Bureau of Economic Research. The chart shows total trade falling in the shaded period. It rises thereafter and stands only a hair below its record high. No such thing can be said of the trade deficit, which mostly just wiggles--indicating very little.

But there are further problems with choosing which type of trade is good and which bad. For example, many politicians bang the table on the need to boost exports to buoy U.S. economic growth. That's a fine goal, but few bang the table over boosting imports.

Historically, the two are joined at the hip. Using quarterly data since 1947, the correlation coefficient between the direction of U.S. imports and exports is 0.90. To be a bit more granular, of the 257 quarters for which reliable data exist, rising exports combined with falling imports occurred only 19 times, according to the US Bureau of Economic Analysis.

Maybe more trade, irrespective of type, is what we should truly seek -- and promoting free trade agreements, lowering import duties and eliminating subsidies could help.

Rising total trade has been a strong wind in the US's economic sails, and with some other parts of the world, especially some emerging markets nations, growing at a faster clip than the U.S., that seems poised to continue.

Our economy is simply not in cutthroat competition with other nations for share of a finite amount of economic activity. It's a global cooperation where everyone's growth makes the pie bigger -- and can easily aid US growth through trade of all kinds.

This article constitutes the views, opinions, analyses and commentary of Fisher Investments as of September 2011 and should not be regarded as personal investment advice. No assurances are made Fisher Investments will continue to hold these views, which may change at any time without notice. In addition, no assurances are made regarding the accuracy of any forecast made herein. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.