Can We Talk About the Trade Deficit?

The answer appears to be no, given the lack of news coverage. Anyhow, the Commerce Department released data on the January trade deficit yesterday. The nominal numbers were good, with a drop in the deficit from $45.6 billion to $41.8 billion, but this decline was driven mostly by lower prices for imported oil.

If we look at the deficit measured in constant dollars (i.e. adjusted for inflation), it rose by almost $3 billion compared to the average monthly deficit for the prior quarter. On annu...