By John S. McClenahen At first glance, the U.S. trade balance with the rest of the world for September, the most recent figure, doesn't look all that bad. Although the trade deficit of $38 billion was $700 million more than economists generally expected, it was $300 million less than the revised August trade deficit of $38.3 billion. However, rather than being a positive sign, the smaller deficit is "a reflection of weak economic growth all over the world," says David Huether, chief economist of the Washington, D.C.-based National Association of Manufacturers. "The modest decline . . . occurred because imports fell faster than exports." Indeed, Commerce's complete data show imports of goods and services decreasing to $120.2 billion in September from $120.8 billion in August, a $600 million difference, while U.S. exports declined to $82.2 billion in September from $82.5 billion in August, a $300 million decrease. "Exports have now declined for two consecutive months and stand fully 10% below their level two years ago," emphasizes Huether. "A noticeable [U.S. economic] recovery is not expected until the second quarter of 2003, so a meaningful upward move in exports will likely be postponed until the second half of next year," he warns. Meanwhile, the latest look at a key measure of U.S. inflation reveals no cause for alarm. The Consumer Price Index (CPI), compiled by the U.S. Labor Department's Bureau of Labor Statistics, increased 0.3% on a seasonally adjusted basis in October, exactly what most economists were predicting. The October figure was a non-threatening one-tenth of a percentage point higher than the CPI's 0.2% rise in September. And the so-called core CPI, which excludes frequently volatile price changes for food and fuel, rose only 0.2% in October. "Inflation remains low, [and] deflation is not looming," states Gerald D. Cohen, a senior economist at Merrill Lynch & Co., New York.