U.S. trade deficit balloons
By MARTIN CRUTSINGER AP Economics Writer
Dec. 18, 2006, 7:44AM
© 2006 The Associated Press
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WASHINGTON — America's deficit in the broadest measure of trade shot up to an all-time high in the summer, reflecting the huge jump in the country's foreign oil bill.
The Commerce Department reported Monday that the current account trade deficit increased 3.9 percent to a record $225.6 billion in the July-September quarter. That represented 6.8 percent of the country's total economy, up from 6.6 percent of the gross domestic product in the spring quarter.
The current account is the broadest measure of U.S. trade because it tracks not only the flow of goods and services across borders but also investment flows. The figure is closely watched by economists because it represents the amount of money the country must borrow from foreigners to make up the difference between what America imports and what it sells overseas.
The current account deficit is expected to hit a new record for the full year, far surpassing last year's $791.5 billion imbalance even though the shortfall for the fourth quarter is likely to show an improvement, reflecting the drop in oil prices after hitting records this summer.
Democrats, who took over control of the House and Senate in the November elections, attacked President Bush's trade policies, charging that the administration has run up record deficits for five straight years by failing to protect U.S. workers from unfair foreign trade practices.
Critics have singled out the biggest culprit as China, the country which is posting the biggest trade surpluses with the United States. A high-level delegation of seven members of Bush's Cabinet, led by Treasury Secretary Henry Paulson, held two days of talks in Beijing last week to launch a new strategic economic dialogue with China aimed at resolving long-festering trade problems between the two countries.
However, the two sides reported no breakthoughs after the initial discussions on the biggest issues such as American manufacturers' complaints that China is manipulating the value of its currency to gain trade advantages. |
