US trade deficit stabilizing?
The June deficit is indeed likely to rise, not least because of rising oil prices, but it is not likely to rise sufficiently to make the second quarter deficit larger than the first quarter deficit.
Does this mean that the U.S. trade deficit has finally stabilized. At this point, such a conclusion would perhaps be premature, but it is not really unlikely. The US trade deficit was driven up by extremely loose fiscal and monetary policies, but now both fiscal and monetary policies have in effect been tightened. Real short-term interest rates have (if we are to believe government inflation numbers) been pushed above zero and the government budget deficit has fallen. Both the Euro-zone and Japan now have lower real interest rates and larger government budget deficits, and their current account surpluses are accordingly falling.