US trade deficit has been halved if oil is excluded7 October, 2012, 3:38. Posted by Zarathustra
Global economic imbalances are being corrected in one way or another. Rebalancing is not going to make every one happy, and in some case painful (think peripheral euro zone countries).
US has been running increasing trade deficit for the best part of the last decade, right until the crisis when global trade collapsed. Deficit widened as the economy recover, but it is no where near the pre-crisis level.
Perhaps more striking, however, is that if one exclude the trade balance of oil, US trade deficit is now only half of the pre-crisis peak. The chart below shows the total trade balance, trade balance for oil and oil related products, as well as total trade balance excluding oil and oil related products (balance of payment basis). As you can see, non-oil trade deficit started declining back in 2006 when it hit the rate of about US$43 billion a month. Currently, US trade deficit is roughly US$21 billion a month, if you exclude oil.
The contribution from oil towards the overall trade deficit is heavily influenced by oil prices. With declining oil consumption in the US as well as increasing output from sources such as shale, it is conceivable that the oil trade balance will be narrowed further.