The trade deficit narrowed from a revised $41.6 billion to $39.9 billion. While the deficit was wider than expected, the deficit now stands at it narrowest level since February 2003. Imports and exports both continued to slow, with declines in exports outpacing the drop in imports.

Trade is Drying Up

  • The deficit in goods dropped $1.7 billion in December, while the trade surplus in services slipped only slightly, $0.1billion or 0.4 percent.
  • In December exports were down 6.0 percent while imports were down 5.5 percent. Global trade appears to be drying up as the world hunkers down in a pernicious global recession.

Collapse in Oil Imports

  • Imports of petroleum goods continued to fall as the average daily price of crude fell more than $15 per barrel between November and December.
  • Net exports have propped up real GDP growth over the past year, but the party is over. Global growth has turned to global contraction, and trade will not add significantly to GDP in 2009.