U.S. trade deficit at 14-month high
Published: Saturday, January 12, 2008 at 6:01 a.m.
Last Modified: Saturday, January 12, 2008 at 12:00 a.m.
WASHINGTON - The U.S. trade deficit in November rose to the highest level in 14 months, reflecting record foreign crude oil prices. The deficit with China declined slightly while the weak dollar boosted exports to another record high.
The Commerce Department reported that the trade deficit, the gap between imports and exports, jumped by 9.3 percent, to $63.1 billion. The imbalance was much larger than the $60 billion that had been expected.
The increase was driven by a 16.3 percent increase in America's foreign oil bill, which climbed to an all-time high of $34.4 billion as the per-barrel price of imported crude reached new records while the volume of shipments declined slightly. With oil prices last week touching $100 per barrel, analysts are forecasting higher oil bills in future months.
Ian Shepherdson, an analyst at High Frequency Economics, noted that the deficit was also pushed higher by a big drop in exports of commercial aircraft. He said that setback is likely to be only temporary given the orders backlog that Boeing must fill to meet global demand.
The big jump in oil prices pushed total imports of goods and services up by 3 percent to a record $205.4 billion. Exports also set another record, rising by a smaller 0.4 percent to $142.3 billion. Export demand has been growing significantly during the past two years as U.S. manufacturers and farmers have gotten a boost from a weaker dollar against many other currencies. That makes U.S. goods cheaper on overseas markets.
Through the first 11 months of 2007, the deficit is running at an annual rate of $709.1 billion, down 6.5 percent from last year's all-time high of $758.5 billion. Analysts believe that the export boom will finally result in a drop in the trade deficit in 2007 after it set consecutive records for five years.
Critics of President Bush's trade policies, however, say the declining deficits will still leave the imbalance at a painfully high level, which they contend reflects unfair trade practices of other nations that have contributed to the loss of more than 3 million U.S. manufacturing jobs since 2000. Trade is expected to be a key issue in this year's presidential campaign.
Much of the Democratic unhappiness is focused on China, where the U.S. trade deficit through the first 11 months of this year totals $237.5 billion, the highest annual imbalance ever recorded with a single country - with December still left to tally. The November deficit with China dipped slightly to $24 billion, but that was down from a record high of $25.9 billion set in October, when retailers were boosting orders to stock their shelves for Christmas.
Analysts predict further increases in the deficit with China in the months to come as U.S. demand has been unfazed by a string of high-profile recalls of a number of Chinese products. China reported Thursday that its trade surplus through December with the world rose by 47.7 percent to a record of $262.2 billion with the December surplus coming in at $22.7 billion, up 9.5 percent from a year ago.
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