Economists surveyed by Bloomberg News had expected the December 2008 trade deficit to total $36.0 billion. The November 2008 was revised slightly higher to $41.6 billion from the previously-released $40.4 billion. The October 2008 trade deficit was $56.7 billion.

In December 2008, imports fell 5.5% to $173.7 billion -- their lowest level since September 2005 -- pushed lower by large drop in imported oil prices.

Exports dropped 6% to $133.8 billion, on declining demand for automobiles, industrial parts, and engines.

Recession weighs on trade totals

Economist Peter Dawson said the recession is hitting both sides of the trade ledger. "You can see the clear effect of lower oil prices, which really helped reduce imports. But the reduction in exports from slowing demand abroad also can be seen," Dawson said. "This report confirms a recession in key emerging markets of China, Brazil and Eastern Europe. Everyone's consumers now appear to be in hunker-down mode."

In December 2008, the trade deficit with China fell to $19.9 billion, declined to $2.8 billion with Canada, but increased to $7 billion with the European Union.

Economists prefer that a nation run a trade surplus as opposed to a trade deficit, as it usually implies that a nation's goods are competitive on the world stage, it's citizens are not consuming too much, and that it's amassing capital for future investment and economic goals.

Trade / Economic Analysis: For investors, the U.S. trade report means if you're considering a stock play with a company whose success is dependent on U.S. exports, a word to the wise: exports are likely to continue to trend lower through at least the end of Q2.