Trade Deficit Sets Record,
$617 Billion
The New York Times
By ELIZABETH BECKER
Published: February 11, 2005
WASHINGTON, Feb. 10 - The American trade deficit broke the
$600 billion barrier in 2004, soaring to $617.7 billion, the
Commerce Department reported on Thursday, but the gap narrowed in
December in part because sharply lower oil prices cut the cost of
energy imports.
The deficit now accounts for more than 5 percent of the
American economy, a level that adds further pressure to forces
pushing down the value of the dollar and increases the amount of
debt held overseas.
For December, the gap between American exports and imports of
goods and services fell 4.9 percent, to $56.4 billion, down from
a revised deficit of $59.3 billion in November. The November
deficit was originally reported at $60.3 billion.
Domestic manufacturers, labor unions and many Democrats say
the huge trade deficit reflects the erosion of the American
manufacturing base and a concurrent loss of jobs. The annual
report showed that the United States lost ground last year, not
only in manufacturing but also in advanced technology products
and services, two of the country's strongest sectors.
The deficit in technology products grew to $37 billion last
year while the surplus for services, including banking, insurance
and investment, shrank to $48.5 billion, the lowest since
1991.
The Bush administration, by contrast, views the deficit
through a different lens. Treasury Secretary John W. Snow said
through a spokesman that the report showed that the American
economy was growing faster than the economies of other advanced
industrial nations. The imbalance, he said, reflects the ability
of American consumers to buy more imports.
Officials also contend that the gap has widened because
foreigners are eager to invest in the United States; the extra
funds flowing in are one consequence of the growing dollars
flowing out to pay for imports.
"We are importing more than those other economies, because we
are creating more disposable income than they are," said Rob
Nichols, chief spokesman at the Treasury Department. The annual
deficit with China set a record at $162 billion, becoming the
largest trade imbalance ever recorded by the United States with a
single country. Democrats in Congress seized on the figure to
repeat their demands that the administration push China to
revalue its currency, which is blamed for the poor performance of
American exports.
"I am tired of watching ships arrive at the Port of Baltimore
filled with cargo for U.S. consumers and then leave empty," said
Representative Benjamin L. Cardin of Maryland, the ranking
Democrat on the trade subcommittee of the House Ways and Means
Committee.
He said that five out of six ships delivering goods to the
United States from China return home empty. And those with cargo
are often carrying waste material, scrap metal or recyclable
paper that are among the fastest-growing American exports to
China.
American textile manufacturers and the biggest business
organizations have asked the administration to bring China to the
World Trade Organization for unfair trading practices that they
say are adding to the trade deficit.
Peter Morici, professor of business at the University of
Maryland, said the deficit was the "single most important tax on
U.S. growth and burden on American working families."
Most of the other advanced industrial economies, including
Germany, Japan and Canada, have overall trade surpluses,
according to figures compiled by the International Monetary Fund.
To help bring global trade into better balance, economists said,
these wealthy nations would need to buy more American goods and
services. At the same time, adjustments in the value of the
dollar, especially with China, which fixes its currency against
the dollar, are required to ease that process, they said.
As for the narrowing trade gap in December, some economists
said the decline was mostly a result of the declining volume and
cost of imported oil that month, while others pointed to the fall
of the dollar, which makes American exports more attractive
overseas.
"There is hope," said Joel L. Naroff, president of Naroff
Economic Advisors. "We could be seeing some narrowing in the
deficit this year and that should add to growth."
Dan Griswold, director of the Center for Trade Policy Studies
at the Cato Institute, dismissed what he called "alarmist
concerns about the size of the trade deficit."
He saw welcome news in the increase in exports in 2004 to
$1.146 trillion, a figure that surpassed the previous peak set in
2000. Imports into the United States hit $1.764 trillion, or 54
percent more than exports.
But the recent decline in the dollar also indicates that
private foreign lenders may be less willing to supply new credit
to underwrite the deficit.
The 2004 deficit is 24.4 percent deeper than the gap in 2003,
which had set the previous record with a deficit of $496
billion.
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