A Simple Reason for the Decline in the Trade Gap

The trade gap for September was down $4.658 billion from August to September ($68.958B to $64.300B).
Petroleum exports were down $4.689 billion.

Part of this was due to lower prices for crude ($62.52 vs. $66.12).
Part of this was due to a normal seasonal decline in imports during September:

Total Energy-Related Petroleum Products
Thousands of Barrels and Value in Thousands

2001
July - 370,199 - $8,437,810
August - 371,249 - $8,509,619
September - 344,231 - $8,199,657
October - 385,580 - $7,826,543

2002
July - 363,153 - $8,789,117
August - 376,323 - $9,415,863
September - 338,099 - $8,778,753
October - 381,444 - $10,239,471

2003
July - 422,313 - $11,598,132
August - 398,306 - $11,306,914
September - 393,522 - $10,686,495
October - 404,183 - $10,902,171

2004
July - 408,626 - $14,177,570
August - 430,232 - $16,080,613
September - 388,526 - $14,971,323
October - 411,620 - $17,686,358

2005
July 419,157 - $21,046,507
August 433,073 - $23,534,564
September 389,645 - $23,332,358
October 432,162 - $25,567,322

2006
July 423,624 - $28,438,931
August 450,451 - $30,497,305
September 413,659 - $25,808,397

Petroluem product imports represented 23.6% of the trade gap in September or 2002.
The represented 40.1% in September of 2006.

We can expect that next month there will be a large increase in the trade gap as oil imports pick back up.

As the economy slows, the trade gap is likely to decline, but the trend should be much slower than $4 billion per month.

Note that during the 2002 slowdown petroleum product imports were down. Declining living standards should eventually force oil consumption down in the US.

Burning Through the Backlog

Toll Brothers gave the first indication about how the housing market fared in October (horribly). Net orders for their quarter ending 10/31/06 were down 57.56% nationally year over year. The order decline was worst in the previously hot Southeastern region, -77.8%.

Toll traditionally kept about 1 year's worth of orders in backlog, so it has taken a long time for closings to decline substantially. Profits remain strong for now, but they'll fall going forward as closings follow orders and backlog down: