by Calculated Risk on 11/09/2006 11:13:00 AM

As expected, the trade deficit decreased in September due to falling oil prices. Looking at the trade balance, excluding petroleum products, the deficit has been fairly stable since the second half of 2005.

Click on graph for larger image.

The red line is the trade deficit excluding petroleum products. (Blue is the total deficit, and black is the petroleum deficit).

My questions are: Has the trade deficit, ex-oil, stabilized or even started to decline? If yes, is this because of a slowing U.S. economy or better growth internationally - or a combination of both?

Also, see Dr. Setser's comments: Oil helps the September trade balance, but how long will the improvement last