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Almost no one pays attention these days to the U.S. current account deficit, largely because it’s far from record levels, either in absolute terms or as a percentage of the total economy. But that doesn’t mean it’s no longer important. After all, this number (which was just updated today) still tells us in the broadest terms how much the U.S. economy makes from the rest of the world and how much it owes other countries.

Since it’s still in deficit, that means that what Americans sell abroad and earn on their overseas investments continues lagging behind what Americans buy from other countries and what foreigners earn on their investments in the United States. The shortfall, moreover, reflects how much America as a whole needs to borrow from abroad to keep up its collective living standards – i.e. living beyond its means. (Selling off assets of course is another form of artificially propping up living standards.) So if it’s lower, that means the nation is borrowing less than it had been. But it’s still borrowing – and fueling the national debt.

This morning the Commerce Department reported that the current account deficit for the second quarter of this year shrank by 3.53 percent from the first quarter – to $98.51 billion. That’s way below the peak it reached in absolute terms ($216.06 billion in the third quarter of 2006), which is encouraging. Even more important, at 2.3 percent of the total economy (gross domestic product), it’s much lower than in 2006, too – when it hit 6.2 percent.

That level was higher than the “danger zone” identified by many economists – the point at which these deficits become unsustainable and become subject to corrections that can result in painful drops in growth and living standards. On the one hand, the United States has long been able to escape these worst consequences of high current account deficits, largely because it prints its own money and because that currency has become the world’s so-called key or reserve currency. Therefore, the United States has been able to keep borrowing in its own currency without worrying that the dollar will suddenly and dramatically weaken and therefore create much worse indebtedness.

On the other hand, this “exorbitant privilege” hasn’t exactly been cost-free. America’s bloated debts during the previous decade clearly led to the historic financial crisis, Great Recession, and ensuing feeble recovery. Even more troubling, back when the current account deficit was peaking, the economy was growing at a 2.7 percent inflation-adjusted rate (for the full year, 2006). Last year, real growth was 2.2 percent, and this recovery has been historically weak.

The glass-half-full take is that growth has resumed even though American indebtedness has fallen. The half empty take is that the nation still can’t manage to grow without piling on more debt. When that point is reached, you’ll know that real economic health and prosperity has been restored.

In case you were wondering: The United States last ran a current account surplus in the second quarter of 1991.