Trade Deficit Turning a Corner?

Chart of the Week for November 14-20, 2003

Imports of goods and services exceeded exports in September, resulting in a U.S. trade deficit of $41.3 billion. This $1.8 billion increase from August brought the rolling total for the quarter to over $120 billion. The third quarter tally is the first 3-month period decrease in the deficit since the fourth quarter of 2001. The weakened U.S. dollar has made U.S. goods more attractive to foreign purchasers (increasing exports) and foreign goods more expensive to U.S. consumers (reducing imports). In theory, increased export activity would lessen the overall trade deficit, all else being equal. Increased foreign demand for U.S. goods and services would encourage economic growth and narrow the trade deficit.

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