U.S.’s Trade Deficit Surpasses $620 Billion, Jumps 24 PercentBy Elizabeth Becker
The New York Times -- WASHINGTON
The American trade deficit broke the $600 billion barrier in 2004, soaring to $617.7 billion, the Commerce Department reported 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 push down the value of the dollar and increases the amount of U.S. 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.
The 2004 deficit represents a 24.4 percent increase over 2003, which had set the previous record with a deficit of $496 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 the American economy was growing at a faster pace than other advanced industrial nations. The imbalance, he said, reflects the ability of American consumers to buy more imports. Officials also argue that the gap has widened because foreigners are eager to invest in the United States; the extra funds flowing in are the flip side 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 Rep. Benjamin L. Cardin of Maryland, the ranking Democrat on the trade subcommittee of the House Ways and Means Committee.