Here’s another sign that the economy is worsening. Even though oil prices are at record highs and people are paying more for gasoline, the trade deficit dropped in December. Today’s on-line Wall Street Journal reports, based on data released by the Commerce Department:

The U.S. trade deficit narrowed sharply in December despite a record foreign oil price, shrinking to a gap smaller than expected as overseas sales rose and imports receded.

The U.S. deficit in international trade of goods and services decreased by 6.9% to $58.76 billion from November’s unrevised $63.12 billion, the Commerce Department said Thursday.

    Seems to me that this has to be another indicator of a troubled economy–people just are not buying foreign goods as much as they would have if they had money in their hands. Intuitively, I would guess that as the housing bubble was starting to pop and people panicked about their finances, they just stopped buying in December–that would be the holiday period.

Purchases of foreign-made consumer goods like household goods fell by $495 million.

    Now, that’s not a lot of money in an economy our size. But, it does, perhaps, indicate something. Now, I’ve always said that the official economic figures mask a much worse situation–it’s a lot harder to make ends meet, pay for health care, school for your kids and basic needs than the official stats tell us. But, still, there’s something to chew on.

    Lastly, pay attention to another factor–one reason exports have increased is that the dollar has been dropping for a while. That means goods produced here are cheaper abroad. I’ve said for a long time that the dollar was too high–benefiting Wal-Mart and other retailers (a high dollar makes goods that Wal-Mart has made for it in China a lot cheaper) , and, yes, American tourists but not the rest of the people. So, the dollar coming down is helping exports–and it could keep declining some more.