The U.S. trade deficit shrank to $137.34 billion in 1988, the first annual decline since 1980, as a surge in exports offset a relentless climb in imports, the government reported Friday.
The Commerce Department said exports shot up to an all-time high of $322.22 billion last year, a dramatic 26.8 percent above the 1987 level, led by a boom in sales of American-manufactured products and farm goods.The huge gain in exports was enough to offset an 8.3 percent increase in imports, which also rose to a record level of $459.56 billion.
For December, the trade deficit shrank slightly to $11.9 billion, down from a revised November figure of $12.2 billion.
However, both November and December represented the highest imbalances between what the United States imported and what it sold abroad since August.
Analysts are worried that the improvement in America's trading performance has stalled. After improving dramatically in the first half of 1988, the deficit actually began to widen again toward the end of the year.
The trade deficit and the related federal budget deficit represent the twin towers of debt that President Bush inherited from Ronald Reagan.
The $137.3 billion deficit for all of 1988 was down 19.4 percent from the all-time high of $170.3 billion set in 1987. It was the first year that the trade deficit has shown any improvement since it fell 12.5 percent to $31.4 billion in 1980, the last year of the Carter administration.
During the Reagan years, the deficit soared above the $100 billion mark as Americans' appetite for foreign goods proved insatiable. In 1985, then-Treasury Secretary James A. Baker III engineered a coordinated effort with major U.S. allies to devalue the dollar in an effort to make American goods more competitive and imports more expensive.
The strategy has proven successful in boosting exports but has had much less of an impact in curbing imports.
The deficit with Japan, which is larger than with any other country, rose to $5.38 billion in December from $5.29 billion in November, and the gap with the newly industrialized countries of Asia fell to $2.79 billion from $2.85 billion.
The gap with Western Europe fell to $1.62 billion from $2.01 billion, and the deficit with Canada fell to $449.4 million from $849.1 million.
The U.S. trade deficit with members of the Organization of Petroleum Exporting Countries rose in December to $796.6 million from $592.9 million in November, reflecting the rise in the nation's oil bill in December.
*****
(Chart)
4th QUATER TRADE DEFICIT
America's merchandise trade deficit, in millions of dollars, from October through December with selected countries and groups:
Country December November October
Canada 449.4 858.7 934.3
European Community 1,322.3 1,451.3 552.7
Japan 5,379.3 5,293.9 5,518.2
Aust,NZ,SAfrica +546.4 +325.6 +489.0
OPEC nations 796.6 592.9 768.2