Brad Setser Unpacks the Good News on the Trade Deficig

Good news on the trade deficit:

Roubini Global Economics (RGE) Monitor: Not quite as bad as I expected (the April trade numbers) Brad Setser | Jun 09, 2006: A $63.4b trade deficit isn't small. But it is a bit smaller than the average $65b deficit of the fourth quarter. And, in all honesty, I expected a bit higher number.

The dog that didn't bark: oil

Oil imports (seasonally adjusted) rose to $23.85b in April, but I certainly expected a bit higher number. The average US oil import price was $56.8 a barrel. The import price is typically lower than the spot price. But it was well below the $70 average market price in April -- I don't think the US oil import bill has peaked.

As importantly, oil import volumes in April were quite weak....

The story on non-oil imports isn't as good. Non-oil goods imports have been around $127-128b all year -- with the exception of February. And non-oil goods exports have also been stalled around $80b. In July of 2005, non-oil imports were around $117b, and non-oil goods exports were around $73.5...