Trade Deficit Sets Record for 5th Year (AP) [View All]

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Trade Deficit Sets Record for 5th Year

Wednesday March 14, 8:38 AM EDT

WASHINGTON (AP) — The deficit in the broadest measure of trade set a record for the fifth consecutive year even though the imbalance in the final three months of 2006 shrank, reflecting a lower foreign oil bill.

The Commerce Department reported that the imbalance in the current account jumped by 8.2 percent to $856.6 billion, representing a record 6.5 percent of the total economy. For the fourth quarter, the deficit shrank by 14.6 percent to $195.8 billion, the smallest quarterly imbalance since the summer of 2005.

Even with the fourth quarter improvement, administration critics say the soaring deficit for the whole year shows the failure of President Bush's trade policies to protect American workers. They contend that America is going into hock to foreigners at an alarming rate even though they have been more than willing so far to hold American assets in return for sales of televisions, cars and other goods to U.S. consumers.

The current account is the broadest measure of trade because it covers not only trade in goods and services but also investment flows between countries. It also represents the amount of U.S. assets that have been transferred into foreign hands to cover the gap between American exports and imports.

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