U.S. Trade Deficit Increases Dramatically

By John S. McClenahen As economists continue to debate the impact of a weaker dollar on the U.S. economy, the nation's trade deficit with the rest of the world increased dramatically in December 2003, the most recent month for which official data are available. Imports totaling $132.849 billion swamped exports valued at $90.371 billion to produce a goods-and-services trade deficit of $42.478 billion, the U.S. Commerce Department reported Feb. 13. The December deficit was $4.125 billion larger than the revised November deficit of $38.353 billion. U.S. exports in December were $200 million less than they were in November; December imports were $3.925 billion more than November's. "Demand for industrial materials and capital goods led the import advance, echoing stronger manufacturing," observes UBS Investment Research, New York. For 2003, the U.S. international trade deficit was $489.378 billion, with China accounting for $123.961 billion of the total. "At the same time, China is rapidly becoming a more important export market for U.S. producers thanks to its strong economic growth and entry into the World Trade Organization," says David Huether, chief economist of the National Association of Manufacturers, Washington, D.C. "Last year, U.S. exports to China grew by 28%, compared to an increase of just 4% to other markets," he notes. In January, the U.S. import prices increased 1.3%, their fourth consecutive monthly increase and the largest since the 1.7% increase in February 2003, the U.S. Labor Department reported on Feb. 13. A 6.2% rise in prices for imported petroleum led the advance. On the other side of the trade ledger, prices for U.S. exports rose for the fifth consecutive month in January. Higher prices for chemical and metals exports were a key factor.

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