The U.S. Trade Balance, aka the deficit, managed to come in much more narrow than expected in the month of September. A deficit of $41.5 billion is still wide, but it was well under the Bloomberg consensus of $45.4 billion. Bloomberg even had a range of $42 billion to $46.5 billion. In short, the report was narrower than every single economist was calling for.

Petroleum appears to be the main factor along with a recovery in exports. August was revised to a deficit of $43.8 billion from $44.2 billion. Exports were up by more than 3% after having been down by 1% in August, while imports were up 1.5% after a 0.2% drop was reported in August. The petroleum deficit was $21.7 billion in September, versus $23.5 billion in August, while the nonpetroleum goods deficit grew to $35.2 billion from $34.9 billion. More proof that we are service economy: services surplus rose to $15.9 billion in September from $15.1 billion in August.

Unfortunately, the trade balance just does not move the needle any longer. It is very small when compared to the budget deficit of the government, and the trade balance has not impacted the financial markets for years and years now.

JON C. OGG

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