- The Washington Times - Thursday, February 11, 2010

The figures on America’s trade deficit during 2009 provided more evidence Wednesday that the economy has begun to recover.

For the year, the trade gap plunged to nearly half of what it had been in 2008, as demand for imports, especially oil, collapsed in response to the nation’s deepest economic downturn since the Great Depression.

But during December, according to figures released Wednesday by the Commerce Department, imports came roaring back and overwhelmed the eighth consecutive monthly increase in exports a sign that consumers are spending again.

The December trade imbalance increased 10.4 percent, reaching $40.2 billion and surpassing the $40 billion level for the first time since December 2008, the Commerce Department reported Wednesday.

The double-digit percentage increase in December’s deficit followed a 9.8 percent jump in November.

Imports, which increased nearly 5 percent last month, were elevated by a $3.6 billion rise in petroleum imports and a $4.5 billion jump in non-oil imports.

“Broad-based increases in imports usually are a sign of recovering domestic demand,” said Jay H. Bryson, global economist for Wells Fargo.

Most economists think the U.S. recession, which began in December 2007, probably ended sometime last summer. The nation’s economic output increased at an annual rate of 2.2 percent in the third quarter, the first uptick following four consecutive quarters of contraction.

Economic growth improved during the October-December period, accelerating to a 5.7 percent annual pace, the fastest advance in six years.

U.S. exports, which bottomed out at $121.6 billion in April during the biggest collapse in world trade since the 1930s, increased by $4.6 billion in December, rising to $142.7 billion.

American exports peaked at $164.4 billion in July 2008. President Obama recently announced a goal of doubling U.S. exports over the next five years.

“Since the nadir in April, the value of the country’s exports has risen 17 percent on the back of foreign economic recoveries,” Mr. Bryson said.

America’s export future looks rosy.

“U.S. exports will continue to benefit both from the recovery in world trade and from the competitiveness supplied by the weak dollar, though some of that competitiveness is being eroded by the euro’s present problems,” said Nigel Gault, chief U.S. economist for IHS Global Insight.

The nation’s expanding trade deficit will, however, exert downward pressure on the U.S. economic growth rate.

“Imports will bounce more than exports,” Mr. Gault said. As a result, “trade will be a small drag on growth in 2010. But that’s a small drag against a backdrop of reviving U.S. and global growth,” he added.

For all of 2009, the U.S. trade deficit plunged 45 percent, falling from $696 billion in 2008 to $381 billion last year.

America’s trade imbalance peaked in 2006 at $760 billion, or 5.7 percent of gross domestic product. The 2009 deficit was 2.7 percent of GDP.

The U.S. merchandise trade deficit with China narrowed last year to $227 billion from $268 billion in 2008; but the bilateral imbalance exceeded $200 billion for the fifth year in a row.

China uses much of its trade surplus with the United States to purchase U.S. Treasury debt securities. With $790 billion in Treasury debt in its coffers, China is now the U.S. government’s biggest foreign creditor.

America’s bill for energy-related imported petroleum products, including crude oil, plummeted last year as both the average price for imported crude oil plunged and the quantity of imported petroleum declined.

Compared to a record-shattering average price of $95.22 per barrel over 2008, the average price for imported crude oil dropped to $56.92 per barrel for the whole of 2009. But during 2009, the price of crude oil increased from $40 per barrel in the first quarter to more than $70 per barrel in the fourth.

Meanwhile, the depth of the U.S. recession curtailed the quantity of imported petroleum products from 12.6 million barrels per day in 2008 to 11.7 million barrels per day last year. Overall, the U.S. petroleum-import bill plunged by nearly $200 billion last year, dropping from $439 billion to $245 billion.

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