2004 Trade Deficit Sets Record, $617 Billion

The American trade deficit broke the $600 billion barrier in 2004, soaring to $617.7 billion, the Commerce Department reported on 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 forces pushing down the value of the dollar and increases the amount of 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. 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 that the American economy was growing faster than the economies of other advanced industrial nations. The imbalance, he said, reflects the ability of American consumers to buy more imports. [more]