I don’t see any cyclicality in that graph. If that were a stock, I’d short it. Keep in mind that the last two trade deficit numbers were the largest on record, this month’s being 50 bil and last month’s 55. Extrapolating that gets you to over 600 bil a year and to over 5% of GDP. It’s also in line with the steadily dropping trend shown by your graph. Of course, the trade deficit <> the current account deficit, which your cite correctly states is the more accurate measure. But a worsening trade deficit does, for obvious reasons, correlate closely with a worsening current account deficit, so there’s definitely reason for concern.
Warning: what follows is going to be long and complicated.
Exports are analogous to heat; an active economy inevitably throws off exports the same way an engine throws off heat. Ditto for imports: imports can be considered kind of equivalent to energy. Without imports, an economy would eventually stagnate, since no new ideas would be coming in, and competition would of course be less than optimal, as would overall welfare, as js africanus would I’m sure be happy to point out.
So, looked at in this way, having a trade deficit almost implies that you have an efficient economy, which takes in large amounts of energy and throws off only a small amount of heat, thereby converting most of its inputs into something other than heat: in economic terms, new businesses that generate more growth, or infrastructure investments that increase the economy’s potential for growth. This is definitely true of the US economy, as I’m sure we’d both agree.
The problem is that imports of goods have to be paid for, and any imports of capital that carry with them an obligation for repayment also have to be paid for. This is where the analogy breaks down. In an engine, inputs of energy result in mechanical force and heat. In an economy, imports result in investment, consumption and, eventually, more exports. The only one of the three that are analogous to mechanical force is investment. Consumption and exports are heat. Exports of course pay for imports, but consumption, if it’s financed by debt obligations, don’t. So in the case of consumption, you have a future obligation to pay for it if it hasn’t been financed through domestic savings or equity investments from abroad.
As your cite points out "Furthermore, the exchange rate in 1998 began to depreciate US dollar. If this trend continues, the United States is likely to have [a] smaller deficit. If the current account deficit continues to increase while the dollar depreciates, that would suggest [a] decline in [the] US economy’s competitiveness. In [the] long-run, this overall decline in US industries’ competitiveness would become a serious problem, since that would lead to [an] overall slowdown of the US economy, decreasing the standard of living for the US residents."
In point of fact, the US dollar really only began to seriously decline in 2002, but between 2000 and 2002 it was reasonably stable. Notice, then, that contemporaneously with the decline in our trade position shown in your graph, the dollar first peaked and then began to decline. So, that means that, for the past four years, we’ve had a declining currency combined with an increasing current account deficit, which your own cite points out implies a “decreasing standard of living for US residents.”
Your cite also says the international investment position, that is whether we are a net creditor or a net debtor, and by how much, is more important than the year by year current/capital account position. That trend is also not good, as is shown in their report about the US (see their figure 2.2 in the US section). Going by the figures in the Statistical Abstract, which your cite didn’t use in order to enable easier international comparisons, but which I’m using because it’s free ( 
), the figures shown are (table 1283, from a PDF downloadable at the Statistical Abstract home page):
1990: -245 billion current cost, -164 billion market value
2001: -1,948 billion current cost, -2,309 billion market value
GDP in 2001 was 10,082 billion, so the 2001 figures correspond (easy calculation to make) to either 19.4% or 23% of GDP that our net investment position was down that year. Given the record current account deficits we’ve run since then, that figure is bound to have gotten worse.
1990’s GDP was 5,803 billion, so the figures for that year were truly negligible. Needless to say, the sharply rising trend in the percentage by which the shortfall in our net investment position is rising relative to GDP is worrisome. As your cite says in its US section, "If the net debtor position continues to increase to a larger portion of the GDP, it would become harmful to the US economy, although it would also depend on whether the international investment debts are in equities or debts."
They go on to say that "The data on net equity and debt ratio to GDP (Figure 2.3) reveals that the international debt position of the US is more serious than the international investment position number suggests. Net debt as a percentage of GDP is approaching 20% in 1996. If this debt surpasses 20% of GDP and continuously increase, this would be bad for the economy, because that means that the US will keep borrowing from abroad, although a rapid increase in GDP growth is not expected. Therefore, it would be more difficult to repay. If the United States is in a rapid economic growth, this can be a good thing, but that is not the case for the United States."
I don’t find any data for this in the Statistical Abstract, but given the continuing increase in our deficit, I doubt that net debt as a percentage of GDP has declined at all. In a speech, Alan Greenspan said “Unlike the financing of payments from export and income receipts, reliance on borrowed funds may not be sustainable. By the end of September 2003, net external claims on U.S. residents had risen to an estimated 25 percent of a year’s GDP, still far less than claims on many of our trading partners but rising at the equivalent of 5 percentage points of GDP annually.” That’s quite a large rate of annual increase, and certainly not sustainable.
As I’ve said before, every President inherits some economic problem from his predecessor that needs solving. Carter inherited rapidly rising inflation, and failed to stop it, and so was thrown out. Reagan solved that problem, and so was re-elected, but created a large fiscal deficit. Bush I failed to solve that problem, and was canned. Clinton solved it, and was re-elected. Bush II inherited from Clinton a large current account deficit and, as we’ve seen from the above, a rapidly deteriorating investment position. He’s failed to solve it, and it can easily be argued that his fiscal profligacy has made it worse. As your own cite points out, combine this with a falling currency, and living standards will decline. All of this has happened under Bush II, as evidenced by the recent Census report that both the rate of poverty and of the number of people without health insurance has risen. And of course this has happened at the same time as the number of jobs has remained stagant.
It may not be the worst recovery ever - there was probably one in the Depression, after all, and it probably wasn’t all that hot either - but it’s certainly far from the best.