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Fri, Jan 14, 2005 - Page 12 News List

US trade deficit hits record high

TRADE GAP The deficit grew 7.7 percent from October, surprising analysts, who had expected lower oil prices in the month to help to stem the growing imbalance


The US trade deficit hit an all-time high of US$60.3 billion in November as American appetites for foreign oil and even imported food reached record levels.

The Bush administration urged other countries to help fix the problem, but analysts said the yawning deficit won't be so easily solved.

The commerce department reported on Wednesday that the shortfall between what the US sells abroad and what it imports increased 7.7 percent from the previous record -- the October deficit of US$56 billion.

That was a surprise given that oil prices had come down during the month. Analysts said it served to underscore the seriousness of the country's trade situation.

The deficit through November totaled US$561.3 billion and is expected to top US$600 billion once December's figures are tallied, far surpassing last year's record of US$496.5 billion.

`grand canyon'

"We now have the Grand Canyon of trade deficits," said Joel Naroff, head of a Holland, Pennsylvania forecasting firm.

"Actually, deficit is really a misnomer. Chasm, gorge, black hole, infinitely deep well all fit the description better," he said.

Democrats, who sought to make the widening trade and budget deficits issues in the presidential campaign, contended that the November shortfall was further evidence that US President George W. Bush's trade policies are not working. They note that the country lost 2.7 million manufacturing jobs over the past four years as companies moved production facilities to low-wage countries.

slow growth overseas

But administration officials said foreign countries are not growing fast enough to stimulate domestic demand that would help boost US exports. Treasury Secretary John Snow told reporters in New York that finance officials from the world's seven wealthiest countries would focus on ways to promote global growth when they meet in London early next month.

"We want to create more engines of world growth," Snow said, contending that Europe and Japan need to do more to stimulate growth.

David Wyss, chief economist at Standard & Poor's in New York, said the solution to the US deficit would come from faster growth overseas, a weaker US dollar and higher US savings rate, which he said could be accomplished in part by lowering the federal budget deficit.

US exports, which had been rising for much of the year, suffered a setback in November, falling 2.3 percent to US$95.6 billion, reflecting widespread declines including in sales of US farm products, which slipped by 1.7 percent to US$4.7 billion.

Imports in November rose 1.3 percent to an all-time high of US$155.8 billion. This increase was led by an 11.8 percent jump in petroleum products, which hit a monthly record of US$19.4 billion, reflecting higher volume as the average price per barrel of crude oil edged down slightly.

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