Americans Buying Fewer Imports
The U.S. trade deficit declined in November for a second consecutive month to $33 billion as America's sharp economic slowdown took some pressure off a soaring trade imbalance. Imports of oil, autos and computers all fell.
The Commerce Department said the 1.7 percent drop in the deficit in November marked the first back-to-back declines in more than three years, since a three-month improvement from May through July 1997. The October figure dropped 0.6 percent.
However, even with the two small declines, the trade deficit remained close to its record high of $33.7 billion set in September. With just one month to go, the deficit for all of 2000 was on track to hit $366 billion, more than $100 billion over the previous record of $265 billion set in 1999.
Many economists are predicting a slow improvement in the trade deficit in 2001 as weaker U.S. economic growth translates into falling demand for imported goods. There is also hope that foreign economic growth will pick up and boost U.S. exports and that the price of oil, a big part of the import bill, will stabilize.
Many of those trends seemed to be surfacing in the November report.
U.S. imports declined 1.1 percent to $123.3 billion, a drop of $1.33 billion, with $981 million of that improvement coming from an 11.8 percent decline in crude oil imports. Both the volume and price of oil fell.
Imports of autos and auto products fell by $179 million to $16.6 billion as the sharp slowdown that has hurt domestic automakers had an impact on foreign manufacturers as well.
Demand for capital goods such as telecommunications equipment, computers and industrial machinery dropped by $785 million. That reflected the slowdown in business investment that has occurred as the economy has braked from a supercharged rate to levels that have some forecasters worried about a possible recession.
The trade deficit has been at record levels throughout the Clinton presidency, a point critics of President Clinton's policies often cited as evidence that his efforts to promote free trade were a failure that had cost thousands of American jobs.
With the country enjoying its longest stretch of uninterrupted economic growth in history, those attacks failed to gain much ground in Congress. But proponents of free trade are concerned as the U.S. economy slips and the unemployment level begins to rise, protectionist arguments could gain ground.
The incoming Bush administration is expected to resist those arguments in favor of continuing Clinton's approach of pursuing market-opening agreements to boost U.S. exports in a world economy that is becoming increasingly linked.
For November, the U.S. deficit with China dropped by 16.2 percent to $7.6 billion while the imbalance with Japan was down an even bigger 19.8 percent to $6.8 billion. For the year, America's trade gap with China is set to surpass the deficit with Japan, the perennial leader in this category.
The Clinton administration's biggest trde achievement in its last year in office was winning approval of permanent normal trade relations with China. That will allow American businesses to take advantage of steep reductions in Chinese trade barriers the country is offering to gain membership in the World Trade Organization.
America's deficit with Canada set a record in November of $4.7 billion, up 3 percent from the October level. The deficit with Mexico, the other partner in the North American Free Trade Agreement, narrowed by 16.3 percent to $2 billion.
U.S. exports of goods and services dropped by 0.8 percent to $90.4 billion as sales of computer products, autos and farm products, including soybeans and corn, all declined.
The big decline in oil imports reflected a 13.9 percent drop in volume with imports of crude oil falling to 8.47 million barrels per day, the lowest level since January 2000, while the price per barrel declined to $28.40, down from $28.62 in October.
By Martin Crutsinger
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