For the third consecutive month, the trade deficit narrowed to $39.9 billion in December, the Commerce Department reported on Feb. 11.The trade deficit fell 4.1% from $41.6 billion in November.
The December gap of $39.9 billion was the smallest deficit since February 2003.
For the full-year 2008, the U.S. trade deficit fell 3.3% to $677.1 billion from the prior year. It was the second year in a row the shortfall has narrowed, after a decline of 7% in 2007. The last time there was a back-to-back annual decline was in 1990-1991.
"Normally, it's good news to see our trade deficit decline. But the trade deficit is decreasing for disturbing reasons: shrinking demand for goods and shrinking output both here and abroad. That's why there is such an urgent need for a sizable economic recovery packageone that makes sure tax dollars are leveraged to create manufacturing jobs in the U.S. so that we can jumpstart the engine of economic growth again," said Scott Paul, executive director of the Alliance for American Manufacturing.
The trade balance continued a months-long trend of imports falling more sharply than exports. Imports plunged % in December from November, to $133.8 billion, while exports dropped 5.5% to $173.7 billion. Overall trade volume shrank 5.7% in December from November.
The trade gap with Canada, the United States's largest trading partner, continued to shrink in December, falling to $2.8 billion, a low last seen in June 1999.
The trade gap with China, the nation's number-two trade partner, shrank for the second consecutive month, to $19.9 billion, with imports plunging 11.3% from November.
"We also see a disturbing trend: China now accounts for nearly half of our trade deficit. That's because the structural issues of currency misalignment, massive industrial subsidies, theft of intellectual property, lax environmental and labor rules and enforcement, and non-tariff barriers to our exports remain unaddressed. If the Obama Administration wants a balanced trade account, it will need to tackle these issues with China" said Paul.
Imports from Japan, the fourth-biggest US trade partner after Mexico, fell to their lowest level since January 2004.
Copyright Agence France-Presse, 2009